The Bank of Canada’s monetary policy statement (interest rate statement), issued today Wednesday, addressed the following points:

The Bank of Canada decided to keep the interest rate unchanged at 5.00% and will continue to tighten monetary policy.
Global economic growth is still slowing, with inflation gradually declining in most economies.
While growth in the United States was stronger than expected, it is expected to slow in 2024, with weak consumer spending and business investment.
In the Eurozone, the economy appears to be in mild contraction, and in China, a decline in consumer confidence and policy uncertainty is likely to constrain activity.
On the other hand, oil prices have fallen by about $10 per barrel compared to what was assumed in the October monetary policy report.
Financial conditions have improved, largely reversing the tightening that occurred last fall.
The Bank of Canada now expects global GDP growth of 2.5% in 2024 and 2.3% in 2025, after a pace of 3% in 2023.
With slowing growth this year, inflation rates in most advanced economies are expected to decline slowly, reaching central banks’ targets in 2025.
In Canada, the economy has almost stopped growing since mid-2023 and growth is likely to remain close to zero during the first quarter of 2024.
Consumers have cut their spending in response to higher prices and interest rates, and business investment has contracted.
With weak growth, supply has caught up with demand, and the economy now appears to be operating with a modest supply surplus.
Labour market conditions have improved, with job vacancies returning to near pre-pandemic levels, and new jobs being created at a slower pace than population growth; however, wages are still increasing by about 4% to 5%.
Economic growth is expected to gradually strengthen in mid-2024.
In the second half of 2024, household spending is likely to recover, and exports and business investment are expected to be boosted by foreign demand recovery.
Government spending contributes significantly to growth this year.
Overall, the Bank of Canada expects GDP growth of 0.8% in 2024 and 2.4% in 2025, nearly unchanged from its October forecast.
Inflation in the Consumer Price Index ended last year at 3.4%, but housing costs remain the largest contributor to inflation, keeping it above target.
The Bank of Canada expects inflation to remain near 3% during the first half of this year before gradually declining to the 2% target in 2025.
Slowing demand reduces price pressures across a broader range of Consumer Price Index components and corporate pricing behavior.
Core inflation measures do not show sustained declines.
Given future forecasts, the Bank of Canada decided to keep the interest rate at 5% and continue normalizing the bank’s balance sheet.
The Bank of Canada remains concerned about risks to inflation expectations, particularly persistent core inflation.
The Bank of Canada’s Governing Council wants to see more ongoing easing in core inflation and continues to focus on balancing demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behavior.
The Bank of Canada remains firm in its commitment to restoring price stability for Canadians.