The central bank has made its second-to-last scheduled rate announcement of the year
The Bank of Canada has left its policy interest rate unchanged in its latest decision, opting not to raise rates further amid signs that the national economy is beginning to slow.
The central bank announced this morning that it was holding that trendsetting interest rate steady at 5.0%, the second time in a row it has kept rates where they are as inflation continues to moderate and economic growth remains largely flat.
In its statement accompanying the decision, the Bank said it was prepared to raise the policy rate further if required, emphasizing its concern that “progress towards price stability is slow and inflationary risks have increased.”
Overall inflation slowed more dramatically in September than markets had expected, to 3.8%, while gross domestic product (GDP) growth also moderated noticeably towards the end of the summer.
Despite its stated concern over inflation, those factors evidently helped convince the central bank, which has already raised interest rates 10 times to the tune of 475 basis points since March 2022, that its strategy aimed at tamping down inflation and cooling the economy was proving largely effective.
Move comes as little surprise to markets
Markets had widely expected the Bank to announce no change in this month’s announcement, its penultimate scheduled decision on interest rates for 2023. Odds of an October hike plunged from 43% to 13% on the back of the latest inflation data, according to Reuters.
The move isn’t expected to have a significant impact on Canada’s housing market, with activity having already slowed considerably since the beginning of the central bank’s rate-hiking path.
Ahead of the Bank decision, RE/MAX Canada president Christopher Alexander told Canadian Mortgage Professional a pause “isn’t going to sway activity one way or another.”
Current high interest rates, he said, have already weighed down heavily on demand and pushed many would-be buyers out of the market.
The Bank of Canada is scheduled to announce its final decision on interest rates for 2023 on December 6.
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