The Bank of Canada rate decision has been released and it will be keeping its interest rate unchanged for the sixth time in a row. They mentioned that they are getting more confident that inflation is moving back to its target while also upgrading their forecast for economic growth.
Bank of Canada Rate Decision
According to the Bank of Canada rate decision, the overnight lending rate will be kept at 5%, a level set last summer after a significant campaign to raise interest rates. This was done to slow down inflation and cool the economy.
Regarding the Bank of Canada rate decision, Governor Tiff Macklem did not mention when the bank might start lowering interest rates. However, he mentioned that he is becoming more confident that the pressures on prices will continue to ease, especially after notable decreases in both headline and core inflation recently.
He said talking about the Bank of Canada’s April rate decision that they are observing the necessary signs, but they need more time to be sure that progress towards stable prices will continue. He added that the recent decrease in core inflation is very recent, and the BoC needs to be certain that this is not just a temporary decrease.
Analysts and traders talking about Bank of Canada’s April rate decision on Bay Street largely anticipate the bank to begin loosening monetary policy around the middle of the year, with many predicting the first rate cut of a quarter-point to occur in June.
The bank seemed to support this expectation with a more cautious rate announcement statement, which omitted mention of officials being concerned about underlying inflation. However, Mr. Macklem talking about the Bank of Canada rate decision cautioned that the governing council is still cautious about cutting interest rates prematurely or moving too swiftly once rate cuts commence.
Talking about the Bank of Canada’s April Rate Decision, he said that the BoC wants to keep monetary policy tight enough for a while. However, if they lower their policy interest rate too soon or reduce it too quickly, it could risk the progress they have made in lowering inflation.
The Next Possible Rate Cut
Based on the Bank of Canada’s April rate decision BMO Capital Markets’ Canadian rates and macro strategist Benjamin Reitzes believes that policymakers are waiting for more evidence that this trend will continue before they consider starting to ease.
He believes that June is still a possibility for a rate cut, however, the upcoming CPI reports will need to be as positive as what we saw in January and February.
Desjardins managing director and head of macro strategy Royce Mendes talking about the Bank of Canada’s April rate decision that the recent updates from the central bank suggest policymakers are almost ready to start reducing interest rates.
Talking about the Bank of Canada’s April rate decision, TD Economics senior economist James Orlando believes that BoC will start reducing rates in July. He said that although inflation has stayed within the BoC’s target range of 1 to 3% lately, markets are now more careful about when the cuts will happen.
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