The Bank of Canada has decided to keep its key interest rate steady at 5% and will keep reducing its holdings of government bonds, a process known as quantitative tightening.

Here's a quick rundown of the current economic situation:

  • Global economic growth has slowed down a bit recently. In the U.S., the economy is still growing steadily, thanks to strong spending and exports. In Europe, growth was pretty much flat at the end of the year, showing no change after a previous dip. Inflation is starting to decrease in both the U.S. and Europe. Financial markets have seen some positive movements, with stock prices going up and the cost for companies to borrow money going down slightly. Oil prices are a tad higher than expected.

  • In Canada, the economy did better than anticipated in the last quarter, although growth was still not very strong. We saw a small increase in spending by people and a drop in business investment. Exports went up significantly, which helped growth. Job growth is slower than the increase in the population, and there might be signs that the pressure for higher wages is starting to ease. Overall, there's a bit of slack in the economy.

  • Inflation cooled down to 2.9% recently, mainly because the prices of goods went up less quickly. However, housing costs are still pushing inflation up quite a bit. Even though inflation seems to be stabilizing around 3% for now, the Bank is closely watching various factors that could keep pushing prices up.

The Bank's decision to hold rates steady is based on a cautious approach to managing inflation, balancing economic demand with supply, and observing trends in wages and pricing. They're committed to making sure prices stay stable for Canadians.

If you have any questions about the Market or about how these rates will effect you - book a chat with us and we will happily guide you through! 905.335.4102

Posted by Tanya Rocca on
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