The Bank of Canada was watching its words at its last interest rate announcement as it was wary of spurring speculation about rate cuts coming any time soon. The Bank of Canada building is seen in Ottawa on Tuesday, July 11, 2023. THE CANADIAN PRESS/Sean Kilpatrick
OTTAWA – The Bank of Canada was watching its words at its last interest rate announcement as it sought to avoid spurring speculation that rate cuts are on the table any time soon.
That’s according to the central bank’s summary of deliberations released today that detail the governing council discussions leading up to its last rate decision.
The Bank of Canada held its key interest rate steady at five per cent earlier this month amid signs of a weakening economy.
The summary says that although the governing council decided holding rates steady was the right decision for now, it considered the possibility that its decision could be misinterpreted as a sign that rates will not rise further or that rate cuts are coming.
To curb this risk, the Bank of Canada decided to emphasize that it will monitor incoming economic data and assess whether rates need to rise further.
Earlier this year, the central bank announced a pause on rate hikes to assess the effects of previous rate increases on the economy, a move that shifted the conversation in financial markets to when interest rate cuts may happen.
This report by The Canadian Press was first published Sept. 20, 2023.
