The Bank of Canada on Wednesday held its target for the benchmark interest rate at 4.5 percent, Trend reports citing Xinhua.
The bank's governing council will continue to assess economic developments and the impact of past interest rate increases, and is prepared to increase the policy rate further if needed to return inflation to the 2 percent target, the central bank said in a press release.
The bank said it is continuing its policy of quantitative tightening to complement its restrictive stance.
According to the bank, the Canadian economic growth came in flat in the fourth quarter of 2022, lower than it projected. With consumption, government spending and net exports all increasing, the weaker-than-expected GDP was largely because of a sizeable slowdown in inventory investment.
Inflation eased to 5.9 percent in January, reflecting lower price increases for energy, durable goods and some services. Price increases for food and shelter remain high, causing continued hardship for Canadians, the bank said, adding that with weak economic growth for the next couple of quarters, pressures in product and labour markets are expected to ease.
This should moderate wage growth and also increase competitive pressures, making it more difficult for businesses to pass on higher costs to consumers, the bank said.
CPI inflation will come down to around 3 percent in the middle of this year. Year-over-year measures of core inflation ticked down to about 5 percent, and three-month measures are around 3.5 percent. Both will need to come down further, as will short-term inflation expectations, to return inflation to the 2 percent target, said the Bank of Canada.