Bank of Canada holds key interest rate at 5%

The Bank of Canada has held its key interest rate at five per cent for the sixth consecutive time since July.

The central bank said that inflation is still too high, but noted that core inflation measures — which strip out volatile sectors like food and energy — have trended downward in recent months.

It will be looking for signs that this trend is sustained before moving on rate cuts.

While inflation cooled to 2.8 per cent in February, with price growth slowing across goods and services, high rent and mortgage interest costs continue to drive up the inflation rate, the bank said.

The bank expects that it will reach its two per cent inflation target in 2025.

Governor Tiff Macklem and deputy governor Carolyn Rogers will hold a news conference at 10:30 a.m. ET explaining the latest announcement.

Most economists expect the first rate cut to happen during the bank’s next meeting on June 5.

The bank first raised interest rates in March 2022, the beginning of an aggressive campaign to cool inflation that resulted in 10 rate hikes in less than two years.

More to come