Bank of Canada holds key interest rate at 5%

The Bank of Canada held its key interest rate steady at 5% today (Jan. 24) as economic growth continues to slow.

As consumers pull back on spending and business investment contracts, the central bank’s most recent announcement was cautiously optimistic. 

The tightening that occurred last fall has been largely reversed, the BoC said, but underlying inflation persists. 

READ: RBC’s Nathan Janzen on what’s next for Canada’s economy

The BoC forecasts GDP growth of 0.8% in 2024 and 2.4% in 2025, roughly unchanged from its October projection.

The country’s economy has stalled since the middle of 2023 and growth will likely remain close to zero through the first quarter of 2024 before beginning to strengthen gradually.

Inflation is expected to remain close to 3% during the first half of this year before gradually easing, returning to the 2% target in 2025.