The PBO also projected that Canada's economy will stagnate this year as tighter monetary policy takes hold
Governor of the Bank of Canada Tiff Macklem walks outside the Bank of Canada building in OttawaOTTAWA - The Bank of Canada will hold its key policy rate at the current level of 4.5% until the end of this year and will start cutting rates in January 2024, Canada's independent budgetary watchdog forecast on Thursday.
The central bank has raised rates at a record pace over the past year to tame inflation that hit a four-decade high of 8.1% in June. After its last hike in January, the Bank of Canada became the first major central bank fighting global inflation to say it would likely "pause" further moves as long as prices continue to come down as it has forecast.
"We expect the Bank of Canada to maintain its 'pause' through to the end of this year," Parliamentary Budget Officer Yves Giroux said in a report. "With CPI inflation on track to return to its 2% target, we then expect the Bank to start lowering its policy rate early next year.
Economic data have been mixed since the central bank signaled the pause, with a blowout jobs report in January showing continued labor market tightness, while inflation and GDP data have been more muted.
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Bank of Canada to hold rates steady in 2023, budget watchdog saysOTTAWA — The Bank of Canada will hold its key policy rate at the current level of 4.5% until the end of this year and will start cutting rates in January 2024,…
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