Bank of Canada holds key interest rate at 4.5%

The Bank of Canada said Wednesday that it is holding its key interest rate at 4.5 per cent.

Economists tracked by Bloomberg widely expected the central bank would pause its aggressive tightening cycle, which began last March from a pandemic low of 0.25 per cent.

The central bank said in January that it planned to hold at 4.5 per cent to assess the impact of rate hikes so far, amid signs that core inflation had peaked and restrictive monetary policy was taking effect.

However, the bank’s governing council also said at that time that it’s prepared to further raise rates if needed to reach its targeted two per cent inflation rate.

Statistics Canada’s latest report said the consumer price index rose 5.9 per cent in January from a year ago, a smaller rise than reported in December but still above the central bank’s target.