Bank of Canada keeps interest rates unchanged

By Ovunc Kutlu

ISTANBUL (AA) - The Bank of Canada on Wednesday kept interest rates unchanged, and said it continues its policy of quantitative tightening.

The target for the overnight rate was maintained at 5%, with the bank rate at 5.25% and the deposit rate at 5%.

"The global economy continues to slow and inflation has eased further," the central bank said in a statement. "In Canada, economic growth stalled through the middle quarters of 2023. Real GDP contracted at a rate of 1.1% in the third quarter, following growth of 1.4% in the second quarter."

The bank said oil prices are about $10 per barrel lower than was assumed in its Monetary Policy Report in October, adding that financial conditions have also eased, while the US dollar has weakened against most currencies, including Canada’s.

"In the United States, growth has been stronger than expected, led by robust consumer spending, but is likely to weaken in the months ahead as past policy rate increases work their way through the economy. Growth in the euro area has weakened and, combined with lower energy prices, this has reduced inflationary pressures," it added.

The central bank said it is still concerned about risks to the outlook for inflation, and stressed that it is prepared to raise the policy rate further if needed.

The bank stressed that its Governing Council wants to see further and sustained easing in core inflation, and continues to focus on the balance between demand and supply in the economy, inflation expectations and wage growth.