Live updates: Bank of Canada holds key interest rate steady at 5% in first decision of 2024

Bank of Canada holds rate steady, says discussions have shifted away from further hikes

The Bank of Canada held its policy interest rate steady for the fourth consecutive time, and said that monetary policy discussions have shifted from whether to raise borrowing costs further to how long the bank should wait before lowering them as the Canadian economy has shifted into a state of “excess supply.”

The widely-anticipated decision keeps the bank’s policy rate at 5 per cent, a two-decade high reached last July.

While the bank remained on hold on Wednesday, there was a notable pivot in its language, which downplayed the odds of further rate hikes and opened the door to the possible rate cuts.

“With overall demand in the economy no longer running ahead of supply, Governing Council’s discussion of monetary policy is shifting from whether our policy rate is restrictive enough to restore price stability, to how long it needs to stay at the current level,” Bank of Canada governor Tiff Macklem said in a statement published alongside the rate announcement.

He did not rule out further rate hikes altogether, but suggested they were unlikely if inflation and economic activity develops in line with the bank’s projection.

– Mark Rendell