Bank of Canada Holds Key Interest Rate at 5% Amid Declining Inflation

Rate Remains Unchanged Despite Inflationary Pressures

Central Bank Weighs Impact of Recent Economic Data

The Bank of Canada (BoC) announced on Wednesday that it has decided to keep its key interest rate, the overnight repo rate, unchanged at 5%. This decision comes after several consecutive months of declining inflation, which has eased some of the pressure on the central bank to raise interest rates further.

The BoC's decision is in line with expectations and reflects the mixed signals that the Canadian economy is currently sending. The annual rate of inflation has declined significantly in recent months, reaching 5.9% in December 2022, down from a high of 8.1% in June 2022. This decline is due in part to falling energy prices and easing supply chain disruptions.

However, the BoC also noted that the Canadian economy continues to face challenges, including rising wages and elevated levels of consumer debt. These factors could put upward pressure on inflation in the future and could force the BoC to raise interest rates again later this year.

The BoC said it will continue toモニター developments in the economy closely and make decisions on interest rates as appropriate. The central bank's next scheduled rate announcement is set for March 8, 2023.