The Bank of Canada delivered a rate pause this morning, leaving its key lending rate unchanged at 4.50%.
This is the Bank’s second pause following eight consecutive rate increases, which raised the overnight target rate by 425 bps since March 2022.
In its statement, the Bank repeated that it “continues to assess whether monetary policy is sufficiently restrictive to relieve price pressures and remains prepared to raise the policy rate further if needed to return inflation to the 2% target.”
The Bank also released its latest economic forecasts in its April Monetary Policy Report. The Bank is expecting CPI inflation to fall from February’s 5.2% reading to around 3% by mid-2023. It is then expected to reach the Bank’s 2% target by the end of 2024.
GDP growth is expected to be just 1.4% this year and 1.3% in 2024 before picking up to 2.5% in 2025, the Bank said.
What happens now?
Today’s decision means there will be no change to the prime rate and no changes to existing variable-rate mortgages. This announcement also has no impact on fixed-rate mortgage holders.
The Bank’s next announcement will take place June 7.
If you have any questions or concerns about the rise in borrowing costs over the past year, I encourage you to reach out so we can discuss your personal situation and options.