09/09/2023
This morning's announcement from the Bank of Canada brings a sense of relief as they have decided to maintain the overnight rate at 5%. *Exhales deeply*
Yes, you read that correctly: There is no change!
Following the slight increase in July's inflation figures, many of us, including our esteemed economists, were bracing ourselves for another rate hike this autumn. However, last Friday's release of Canada's economic performance and unemployment data has swayed the Bank of Canada's stance. It seems that their four rate hikes totaling 4.75% over the past year have finally started impacting economic data and, frankly, taking a toll on many Canadians.
It's essential to remember that the Bank of Canada's primary concern is inflation. As long as inflation remains above their 2% target, they will continue to use their only available tool: raising interest rates.
So, for today, let's view this rate pause as a small victory, but we shouldn't let our guard down just yet. Another rate hike this fall isn't entirely ruled out, meaning we're not completely in the clear. There might be more challenges ahead, but we're optimistic it won't be too severe.
Between now and the next Bank of Canada rate announcement on October 25th, we have two more sets of job market and inflation reports to consider. The hope and expectation are that the unemployment rate will keep rising while inflation falls, allowing the Bank of Canada to halt rate hikes and, eventually, start lowering rates in 2024.
Stay tuned, and we'll continue to provide you with timely updates on what's crucial and when you need to be informed.
If you're curious about our predictions, feel free to reach out—we're here to help!
