Select Page

BoC kept overnight rate unchanged at 5.00% as widely expected. In the accompanying statement, BoC expressed that it’s “still concerned about risks to the outlook for inflation”, in particular the “persistence in underlying inflation”. The central bank’s focus remains squarely on the equilibrium between demand and supply within the economy, closely monitoring inflation expectations, wage growth, and corporate pricing behaviors.

BoC’s assessment of the economy suggests a phase of stagnation, projecting growth to “likely remain close to zero” through Q1. However, gradual strengthening in growth is anticipated around mid-year, predicated on the expectations of pickup in household spending and boost in exports and business investment, spurred by a recovery in foreign demand. Government spending is also expected to play a significant role.

For 2024, BoC forecasts GDP growth at 0.8%, a figure that aligns with its October projection. Looking further ahead, the bank anticipates a more robust growth rate of 2.4% in 2025.

Inflation, a critical concern for the BoC, ended the year at 3.4%. Shelter costs continue to be a significant factor in driving inflation above the target. The central bank’s projections indicate that inflation will hover around 3% during the first half of the year, with expectations of a gradual decline, ultimately returning to the 2% target by 2025.

Full BoC statement here.

Share it on social networks