Inflation Eases, Bank of Canada's Monetary Policy on Hold
Over the past year, the Bank of Canada has raised rates eight times to curb inflation, which reached an annualized rate of 8.1% last year and slowed to 5.9% in January. The Bank of Canada's target is for inflation to reach 2%. The latest data remains in line with the Bank's expectation that inflation will fall to around 3% in mid-2023.
Canada's GDP Stalls, Bank of Canada Prepared to Increase Policy Rate
Despite strong economic data, including a January jobs report, gross domestic product stalled in the fourth quarter, falling short of the Bank of Canada's 1.3% growth forecast. In its statement, the central Bank acknowledged the below-expected growth and said that restrictive monetary policy continues to weigh on household spending. The Bank of Canada expects near-zero growth for the first three quarters of 2023 and said it is prepared to increase the policy rate if needed to reach its 2% inflation target.
