OTTAWA — The Bank of Canada will hold its key policy rate at the current level of 4.5 per cent until the end of this year and will start cutting rates in January 2024, Canada’s independent budgetary watchdog forecast on Thursday.
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Bank of Canada to hold rates steady till year-end start cutting in Jan 2024: budget watchdog
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Bank of Canada to hold rates steady till year-end start cutting in Jan 2024: budget watchdog
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This forecast follows the Bank’s decision last month to pause its rate hikes, which had been expected for several quarters due to economic uncertainties. The Bank’s decision to keep rates at 4.5 per cent until the end of the year has been widely welcomed by economists and market participants as a sign of patience in monetary policy.
The Bank’s decision to hold rates steady is part of its broader strategy to support economic growth while managing inflationary pressures. Given the current economic environment, maintaining current rates provides a framework for achieving sustainable growth without causing deflation or overheating the economy.
The budget watchdog’s forecast also highlights the potential for rate cuts in 2024, with the Bank signaling its intention to adjust monetary policy based on evolving economic conditions and inflationary pressures. The timing of the first cut in January 2024 is particularly significant as it marks a potential shift in the Bank’s strategy after a period of pause.
Economic projections from the Bank suggest that growth will remain moderate, with a focus on maintaining job creation and household wealth building. However, the budget watchdog’s forecast also raises concerns about the broader labor market, noting that January’s jobs report showed continued labor market tightness despite inflationary pressures remaining muted.
The Bank’s rate policy has been closely watched as it navigates the delicate balance between supporting economic growth and managing inflation. The decision to hold rates steady until the end of the year reflects a cautious approach, avoiding abrupt changes that could disrupt markets or send conflicting signals about the Bank’s commitment to its dual mandate of price stability and sustainable growth.
In summary, the budget watchdog’s forecast underscores the Bank’s strategy to maintain current rate levels while signaling potential policy adjustments in 2024. This approach aims to support economic resilience and manage inflationary pressures effectively, ensuring long-term sustainability of Canada’s economic environment.
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Bank of Canada to hold rates steady till year-end start cutting in Jan 2024: budget watchdog
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This forecast follows the Bank’s decision last month to pause its rate hikes, which had been expected for several quarters due to economic uncertainties. The Bank’s decision to keep rates at 4.5 per cent until the end of the year has been widely welcomed by economists and market participants as a sign of patience in monetary policy.
The Bank’s decision to hold rates steady is part of its broader strategy to support economic growth while managing inflationary pressures. Given the current economic environment, maintaining current rates provides a framework for achieving sustainable growth without causing deflation or overheating the economy.
The budget watchdog’s forecast also highlights the potential for rate cuts in 2024, with the Bank signaling its intention to adjust monetary policy based on evolving economic conditions and inflationary pressures. The timing of the first cut in January 2024 is particularly significant as it marks a potential shift in the Bank’s strategy after a period of pause.
Economic projections from the Bank suggest that growth will remain moderate, with a focus on maintaining job creation and household wealth building. However, the budget watchdog’s forecast also raises concerns about the broader labor market, noting that January’s jobs report showed continued labor market tightness despite inflationary pressures remaining muted.
The Bank’s rate policy has been closely watched as it navigates the delicate balance between supporting economic growth and managing inflation. The decision to hold rates steady until the end of the year reflects a cautious approach, avoiding abrupt changes that could disrupt markets or send conflicting signals about the Bank’s commitment to its dual mandate of price stability and sustainable growth.
In summary, the budget watchdog’s forecast underscores the Bank’s strategy to maintain current rate levels while signaling potential policy adjustments in 2024. This approach aims to support economic resilience and manage inflationary pressures effectively, ensuring long-term sustainability of Canada’s economic environment.
