3% by the end of 2024: What economists say about Bank of Canada's latest rate decision

financialpost.com:

The Bank of Canada held its benchmark interest rate at five per cent on Oct. 25, its second consecutive pause, meeting economist expectations amid a slowdown in the economy.

The bank said there is growing evidence higher interest rates are cooling the Canadian economy and noted easing demand for housing, goods and services and business investment in its statement accompanying the decision.

“Signs of flagging demand were reason enough for the Bank of Canada to keep its target rate on hold,” Avery Shenfeld, chief economist at CIBC Capital Markets, said.

However, with inflation still above target, Shenfeld noted the bank wasn’t ready to declare its job over in getting inflation to two per cent.

The bank warned it could hike interest rates again if “inflation expectations, wage growth and corporate pricing behaviour” don’t moderate.

“Governing Council is concerned that progress towards price stability is slow and inflationary risks have increased, and is prepared to raise the policy rate further if needed,” the bank said.

The bank also noted that its preferred measures of core inflation remain above target at 3.7 per cent and 3.8 per cent year over year.

“The bank is clearly frustrated by the achingly slow (but entirely predictable) descent in inflation,” Douglas Porter, chief economist at BMO Economics, said.

Here’s what economists say about the Bank of Canada hold and where rates could go from here.

“Signs of flagging demand were reason enough for the Bank of Canada to keep its target rate on hold at five per cent today, but with inflation still well above target, it’s not yet willing to give up on its warning that further hikes could still be in the offing if prices don’t see enough cooling ahead.

Both decisions should