Bank of Canada Holds Key Interest Rate Unchanged at 5%

The Central Bank of Canada announced on Wednesday that the key interest rate will remain unchanged 5%; to keep its benchmark index unchanged for the fourth time in a row, in line with expectations.

The central bank last raised interest rates in July 2023.

Central Bank Governor Tiff Macklem said, in a press conference Tuesday, that discussions at the Bank of Canada are now shifting from the extent of the rise to the duration. Instead of looking primarily at whether the bank's policy interest rate is high enough, the bank is now considering how long its "current restrictive stance" of interest rate hikes should continue.

Despite this potential shift , the bank is not saying interest rates will fall soon, given continuing concerns about inflation.

In his speech to reporters, Macklem noted that inflation has declined over the past few months as interest rate increases led by the Bank of Canada have helped slow the economy, but he said that “inflation is still very high,” noting that there are still inflationary pressures.

While Macklem said the bank did not rule out further interest rate increases if inflation rose, he also said that if the economy "develops broadly in line with its current expectations," he said he did not expect to discuss raising interest rates.