Bank of Canada Holds Key Interest Rate Steady at 3.25%

Policymakers Led by Governor Tiff Macklem Reiterate Willingness to Act

Bank of Canada Leaves Rate Unchanged at 5%

The Bank of Canada (BoC) held its policy rate steady at 3.25% on Wednesday, September 6, 2023, in line with market expectations. This marks the first pause in the central bank's tightening cycle, which has seen seven consecutive rate hikes since March 2022.

In its accompanying statement, the BoC acknowledged that "inflation remains elevated" but noted that "the pace of price increases is moderating." The bank also expressed concern about the impact of higher interest rates on economic growth, saying that "the cumulative effect of interest rate increases will weigh on growth in the coming quarters."

The BoC's decision to hold rates steady comes as a relief to some economists, who had worried that the central bank might be too aggressive in its tightening stance. However, others argue that the BoC should have continued hiking rates to bring inflation under control more quickly.

The BoC's next scheduled rate announcement is set for October 25, 2023. The bank has indicated that it will continue to assess the economic data and adjust its policy accordingly.