Bank of Canada holds interest rate at 5% for fifth straight meeting

financialpost.com:

The Bank of Canada held its key overnight interest rate at five per cent Wednesday, with governor Tiff Macklem declaring it’s “still too early” to consider lowering the policy rate.

The hold was widely expected by economists, and Macklem said that while there had been no big surprises since the rate hold in January — economic growth remained weak and inflation has eased further as higher interest rates restrained demand — inflation is still close to three per cent and underlying inflationary pressures persists.

“The assessment of Governing Council is that we need to give higher rates more time to do their work,” Macklem said.

Many economists are forecasting that rates will start to come down by June, but the central bank governor gave few hints about when the cuts will begin, other than to say the bank’s goals of price stability and low stable inflation at a target rate of two per cent remain.

“We’ve come a long way in our fight against high inflation. Monetary policy is working — inflation is coming down,” Macklem said. “But it’s too early to loosen the restrictive policy that has gotten us this far.”

During a news conference following the rate announcement, Macklem did allow that a strong spring housing market and further government spending announcements in upcoming budgets could delay a reversal.

“If everything else in our projection was the same and housing was stronger and government spending was stronger, growth would probably be stronger and there would probably be less downward pressure on inflation,” he said. “So that is something we would have to take into account when we consider our interest rate setting.”

I think it’s very safe to say we’re not going to be lowering rates at the pace we raised them

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