The Bank of Canada kept the interest rate at 5 percent today, Wednesday, as the Canadian economy continues to slow, with signs that supply and demand are now approaching balance.

Increases in interest rates have weakened economic growth, with the average Canadian economic growth at 1 percent this year. The economy is expected to remain weak throughout 2024, before rising to 2.5 percent in 2025.

The bank stated: "With clearer signs that monetary policy is curbing spending and easing price pressures," the board decided to keep the interest rate at 5 percent and continue to normalize the bank's balance sheet.

However, the bank said it still has concerns that progress towards the target rate of 2 percent is still slow, and oil prices are higher than expected, with a risk of a further increase if the conflict between Israel and Palestinian factions in Gaza escalates into a regional conflict.

On the local side, inflation expectations among households and businesses remain high, which also poses a risk to the central bank's ability to return to the target.

The bank also indicates that tightening monetary policy may lead to market volatility, which could cause a sharp slowdown in global growth.