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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.
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