Bank of Canada: Review of the development of the key interest rate in 2023

Posted On: December 7, 2023

(Photo: The Canadian Press)

The years go by and are not the same in terms of monetary policy. Here is the summary of the Bank of Canada’s announcements.

2023

December 6th: 0%

The Bank of Canada again said it would keep its key interest rate unchanged at 5%, encouraged by signs that higher interest rates are helping to reduce inflation.

October 25: 0%

The Bank of Canada announced on Wednesday that it would keep its key interest rate at 5%, particularly due to the economic slowdown and a decline in inflation in the country.

September 6th: 0%

The Bank of Canada left its key interest rate unchanged and decided not to increase borrowing costs as the economy shows signs of slowing. However, the Bank of Canada is keeping the door open to further rate hikes, stressing that its board remains concerned about inflationary pressures and is “ready to raise the key rate again if necessary.”

July 12: +0.25%

The Bank of Canada raised its key interest rate by 25 basis points to a total of 5%. This further rise in interest rates would be due to robust demand in the economy and strong underlying inflationary pressures, according to the central bank.

June 7: +0.25%

The Bank of Canada announced a 25 basis point increase in its key interest rate to 4.75%. The central bank’s key interest rate is now at its highest level since April 2001.

April 12: 0%

The Bank of Canada left its key interest rate at 4.5% and said recent economic data had reinforced its belief that inflation would continue to slow in the coming months.

March 8: 0%

The Bank of Canada said it would keep its key interest rate at current levels, indicating it would continue to analyze developments in the economy and the impact of the eight hikes it made last year. The central bank added that its decision to keep the overnight interest rate at 4.50% was based on recent economic data.

However, the door remains open for further rate hikes if the economy proves too strong or high inflation proves more persistent.

January 25: +0.25%

The first increase in 2023 and the eighth increase in a row brings the key interest rate to 4.5%. The institution expects inflation to fall “significantly” this year, although the rate is still three times higher than its 2% target in December. The Bank of Canada also says it is prepared to raise its key interest rate again “if necessary.”