Bank of Canada holds key interest rate at 5% again, saying it's still too soon for rate cuts

Jenna Benchetrit · CBC News · Posted: Mar 06, 2024 6:51 AM PST 

The Bank of Canada has held its key interest rate at five per cent again, saying that it's still too soon to consider rate cuts while underlying inflation persists.

Economists were widely expecting the central bank to hold the rate. The bank said in a note on its website that it was still concerned about underlying inflation, which strips out volatile items like food or fuel.

Bank of Canada governor Tiff Macklem elaborated on those concerns during a press conference following the announcement. 

He said there are still global risks — like the attacks on Red Sea shipping routes, which have impacted global shipping costs — that could feed into higher inflation if they escalate.

Domestically, "we are seeing a gradual easing in underlying inflationary pressures. The risk is that stalls," he said. "We don't want inflation to get stuck, materially, about our [2 per cent inflation] target."

The central bank expects inflation to stay close to three per cent during the first half of this year before it slowly eases.

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