The Bank of Canada is expected to take in stride surprising recent economic strength and leave interest rates unchanged at its meeting on Wednesday, pinning its hopes on activity cooling as higher borrowing costs sink in, analysts said.
The central bank is set to announce its next interest rate decision on Wednesday. The announcement will be accompanied with updated economic projections for growth and inflation in its quarterly monetary policy report.
For months, the economic data that the Bank of Canada relies on for its interest rate decisions has been sending mixed signals on the state of the economy. CIBC executive director of economics Karyne Charbonneau says a closer look at the economic growth numbers, however, shows that there may not be too much cause for concern.
The unemployment rate also held steady at five per cent for the fourth consecutive month. That's just above the all-time low of 4.9 per cent reached in the summer. The month-over-month inflation data shows inflation is actually tracking much closer to the Bank of Canada's inflation target of two per cent.
The Bank of Canada appears cautiously optimistic that its aggressive rate hikes between March 2022 and January 2023 -- which saw its key interest rate rise from near zero to the highest it's been since 2007 -- will be forceful enough to quell inflation.
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