The odds of another rate hike have decreased, the Bank of Canada’s governing council agreed during its discussions ahead of its most recent interest rate decision.
The Bank of Canada released its summary of deliberations for the Dec. 6 interest rate decision Wednesday, revealing the governing council felt more optimistic about the country’s inflation outlook and found “recent data pointed in the right direction.”
“Members agreed that the likelihood that monetary policy was sufficiently restrictive to achieve the inflation target had increased,” the summary says.
Recent data showed the economic slowdown is being driven by a pullback in spending, which the central bank is relying on to bring inflation down.
The central bank opted to hold its key interest rate steady earlier this month for a third time in a row, as forecasters widely expect its next move will be to cut interest rates sometime next year.
Its key rate currently sits at five per cent, the highest it’s been since 2001.
But the Bank of Canada hasn’t ruled out the possibility of another rate increase yet, noting in the summary that it may be necessary to raise rates again to further quash inflation.
Statistics Canada released its November consumer price index report on Tuesday, which showed inflation did not slow down last month, holding steady at 3.1 per cent.
While the inflation reading was higher than expected, economists were happy to see some core measures of inflation continued to trend downward.
The Bank of Canada pays considerable attention to core measures of inflation because they help the central bank ignore more volatile prices and gauge where inflation is headed.
The central bank’s next rate decision is slated for Jan. 24.
This report by The Canadian Press was first published Dec. 20, 2023.