Sept 6 Rate Announcement - Bank of Canada

The Bank of Canada today held its target for the overnight rate at 5%.

Central banks in advanced economies focus on price stability amid elevated core inflation levels. Global growth slowed in Q2 2023, particularly in China due to property sector weaknesses. The U.S. saw robust growth from consumer spending, while Europe's service sector countered manufacturing declines. Rising global bond yields and oil prices challenge economic stability.

Canada experiences a necessary period of weaker growth to alleviate inflationary pressures. Q2 2023 witnessed a 0.2% output decline, driven by weakened consumption, housing, and wildfires. Slower household credit growth results from higher rates. Inflation persists, with CPI at 3.3% in July, and core inflation remains around 3.5%.

The central bank maintains a 5% policy interest rate but stands ready to adjust if needed, closely monitoring various economic indicators. Their unwavering commitment remains restoring price stability.