By Steve Scherer and David Ljunggren
OTTAWA (Reuters) -The Bank of Canada (BoC) on Wednesday held its key overnight rate at 5% and left the door open to another hike, saying it was still concerned about inflation while acknowledging an economic slowdown and a general easing of prices.
The central bank raised rates by a quarter point in both June and July to a 22-year high and has left them on hold in the three policy-setting meetings since. Inflation slowed to 3.1% in October, down from a peak of more than 8% last year, but it has remained above the bank's 2% target for 31 months.
«Governing Council is still concerned about risks to the outlook for inflation and remains prepared to raise the policy rate further if needed,» the BoC said in an unusually curt, five-paragraph statement.
It said it wanted to see a «further and sustained easing in core inflation.»
The Canadian dollar was trading 0.3% higher at 1.3553 to the greenback, or 73.78 U.S. cents.
But the statement dropped language used in its previous policy statement, which said «progress towards price stability is slow and inflationary risks have increased.»
The BoC instead noted on Wednesday that labor market pressures had eased and growth stalled during the middle part of the year, leaving the economy no longer in excess demand.
«Higher interest rates are clearly restraining spending,» the BoC said. Oil prices are about $10 lower per barrel than it had forecast in October.
«The slowdown in the economy is reducing inflationary pressures in a broadening range of goods and services prices,» the BoC said, noting that October core inflation was at the low end of a range seen in recent months.
«It is a stay-tuned message,» said Derek Holt, vice president of capital
Read more on investing.com