The Bank of Canada has held its trendsetting interest rate at 5.0% for a third straight setting and talk of further increases has been all but silenced.

In the statement that came with the most recent rate announcement, The Bank offered a number of reasons for the decision to hold steady:

• higher rates are “clearly restraining spending”
• the economy “is no longer in excess demand”
• the general economic slowdown is reducing inflationary pressures

Even though The Bank said it will hike again, if necessary, most market watchers are looking into their crystal balls trying to predict when, and by how much, The Bank will be cutting rates.

The general consensus right now is for a quarter point (25 basis point) cut in April.  There are some who expect to see it a little earlier, in March.  Others say it’ll be June.

The projections for overall cuts in 2024 range between 1 and 2 full percentage points.

The Bank of Canada still has some inflation concerns, in particular, core inflation which continues to run in the 3.5% to 4.0% range.

Headline inflation, also known as the Consumer Price Index, is 3.1%; tantalizingly close to The Bank’s 1.0% to 3.0% target range.

The Bank will also be keeping a close watch on the job market.

The next interest rate announcement is set for January 24, 2024.

Published by First National Financial LP