OTTAWA, April 10 (Xinhua) -- The Bank of Canada Wednesday held its policy interest rate at 5 percent.
Governor Tiff Macklem said in a press conference that the central bank will be closely watching in the months ahead the evolution of core inflation to decide when to lower the policy rate.
"The further decline we've seen in core inflation is very recent. We need to be assured this is not just a temporary dip," Macklem said.
The Bank said in a press release that core measures of inflation, which had been running around 3.5 percent, slowed to just over 3 percent in February, and 3-month annualized rates are suggesting downward momentum.
The Bank expects CPI inflation to be close to 3 percent during the first half of this year, move below 2.5 percent in the second half, and reach the 2 percent inflation target in 2025.
"We don't want to leave monetary policy this restrictive longer than we need to. But if we lower our policy interest rate too early or cut too fast, we could jeopardize the progress we've made bringing inflation down," Macklem said.
According to the release, Canada's economic growth is forecast to pick up in 2024. Overall, the Bank forecasts GDP growth of 1.5 percent in 2024, 2.2 percent in 2025, and 1.9 percent in 2026. The strengthening economy will gradually absorb excess supply through 2025 and into 2026.
The Bank is continuing its policy of quantitative tightening, the release said. ■
