Mortgage Blog

Bank of Canada Rate Announcement - January 24, 2024

January 24, 2024 | Posted by: Ken Fadel

The BoC cited the ongoing risk of inflation for its decision to maintain its overnight benchmark interest rate at 5.0%.

CPI inflation ended the year at 3.4% and the Bank expects inflation to remain close to 3% during the first half of 2024 “before gradually easing” and returning to the Bank’s 2% target in 2025.  Shelter costs remain “the biggest contributor to above-target inflation.” 

The Bank noted that the economy has “stalled” since the middle of last year and believes growth will likely remain close to zero through the first quarter of 2024 as consumers have pulled back their spending in response to higher prices and interest rates.

Global economic growth continues to slow, with inflation easing “gradually” across most economies.  While growth south of the border has been stronger than expected, it is anticipated to slow in 2024 as consumer spending and business investment weakens.

The Bank believes that Canadian economic growth will strengthen gradually “around the middle of 2024.” In addition, it expects household spending will likely “pick up” in the second half of 2024, with GDP growth of 0.8% forecasted for 2024 and 2.4% for 2025.

The Bank’s statement also noted that it “is still concerned about risks to the outlook for inflation, particularly the persistence in underlying inflation” and wants to see “further and sustained easing in core inflation.”  As it has said consistently over the past year, the Bank will remain “resolute in its commitment to restoring price stability for Canadians.”

The Banks’s next scheduled policy interest rate announcement is March 6, 2024.

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