Bank Of Canada Keeps Rates On Hold, Sees Inflation Falling As Forecast

• The Bank of Canada on Wednesday left its key overnight rate on hold at 4.50%, as expected, becoming the first major central bank to suspend its monetary tightening campaign in the face of an anticipated easing of high inflation.
• Over the past year, the Canadian central bank raised rates eight times in a row by a total of 425 basis points to tame inflation, which peaked at an annualized rate of 8.1% last year and slowed to 5.9% in January, still almost three times the Bank of Canada's 2% target.
• "Overall, the latest data remains in line with the Bank's expectation that CPI inflation will come down to around 3% in the middle of the year," it said in a statement.
• While some economic data have been particularly strong since the last policy meeting, including a blockbuster January jobs report, gross domestic product stalled in the fourth quarter - far weaker than the 1.3% annualized growth forecast by the BoC.
• The central bank acknowledged that fourth-quarter growth came in below its expectations and dropped language saying the economy was in "excess demand". "Restrictive monetary policy continues to weigh on household spending," the statement said. "With weak economic growth for the next couple of quarters, pressures in product and labour markets are expected to ease."
• The central bank said core inflation measures and short-term inflation expectations still needed to fall in order to return inflation to target. The BoC expects near-zero growth for the first three quarters of 2023.

(Source: Reuters)