The Bank of Canada maintains overnight rate at 5% amid continued quantitative tightening measures.
The Bank of Canada announced its decision to keep the target for the overnight rate at 5%, with the Bank Rate at 5¼% and the deposit rate at 5%. The Bank reaffirmed its commitment to quantitative tightening.
Globally, economic growth witnessed a slowdown in the fourth quarter. Despite this, US GDP growth remained surprisingly robust, buoyed by strong contributions from consumption and exports. Meanwhile, the euro area experienced stagnant economic growth at the end of the year following a contraction in the previous quarter. Inflation rates in both the United States and the euro area continued to ease. Bond yields have seen an uptick since January, accompanied by a narrowing of corporate credit spreads, while equity markets have seen significant gains. Additionally, global oil prices are slightly higher than previously assumed in the January Monetary Policy Report (MPR).
In Canada, the economy saw stronger-than-expected growth in the fourth quarter, albeit still below its potential. Real GDP expanded by 1% following a 0.5% contraction in the third quarter. Consumption increased modestly by 1%, while final domestic demand experienced a decline primarily due to a significant drop in business investment. However, growth was boosted by a notable increase in exports. Despite continued employment growth, it remains slower than population growth, and there are indications of easing wage pressures. Overall, the data suggests that the economy is operating with modest excess supply.
https://www.bankofcanada.ca/2024/03/fad-press-release-2024-03-06/
