This morning, the Bank of Canada announced that they have maintained its key interest rate. The prime rate will remain the same at 7.20%. Therefore, for those who have a variable rate credit product, there will be no changes for payments.
The global economy is slowing down due to past interest rate increases and rising global bond yields, which are affecting demand. The Bank predicts global GDP growth of 2.9% this year, 2.3% in 2024, and 2.6% in 2025.
The Bank anticipates the Canadian economy to grow by 1.2% this year, 0.9% in 2024, and 2.5% in 2025.
Inflation has been fluctuating, but higher interest rates are moderating it in most areas, except for housing costs.
The Bank's projection suggests CPI inflation will average around 3.5% until the middle of 2024 before gradually easing to 2% in 2025.
Based on this recent data, the Governing Council has decided to hold the rate. The dynamics of core inflation and the outlook for CPI inflation will continue to be assessed, and the Bank is prepared to increase rates further if needed. The Bank remains committed to restoring price stability for Canadians and achieving the 2% inflation target.
The next Bank of Canada announcement will be on December 6, 2023.
If you'd like to learn more about this recent announcement or would like to know how this affects you, please feel free to reach out to us and we'd be happy to help!