BoC keeps overnight rate unchanged at 5.00% as widely expected. In the prepared remarks for the press conference, Governor Tiff Macklem emphasized that it remains “still too early” for the central bank to contemplate reduction in the policy interest rate.
Governor Macklem recognized that recent inflation figures indicate that the monetary policy is “working largely as expected”. However, he also cautioned that the journey towards the inflation target is poised to be “gradual and uneven,” with “upside risks to inflation” still in play. The Governing Council is looking for “further and sustained easing in core inflation” before considering any shifts in policy direction.
On the economic growth front, Macklem observed that Canada’s performance has been “somewhat stronger than projected,” albeit still “weak and below potential.” The labor market’s gradual easing and expectations for inflation to hover around 3% into mid-year—before a potential decrease in the latter half—were highlighted as key factors in the economic outlook. Additionally, Macklem pointed out that gasoline prices and shelter cost pressures are expected to introduce volatility to inflation rates in the upcoming months.
Full BoC statement and Macklem’s remarks.
