The Bank of Canada held its target for the overnight rate at 5% during its March meeting and pledged to continue normalizing the Bank’s balance sheet, as policymakers remained concerned about risks to the outlook for inflation. The bank stated that it will persist in its policy of quantitative tightening until it observes further and sustained easing in core inflation. The latest data revealed that CPI inflation eased to 2.9% in January, but year-over-year and three-month measures of core inflation were in the 3% to 3.5% range. Policymakers project inflation to remain close to 3% during the first half of this year before gradually easing. The bank also noted that GDP growth remained weak and below potential, while employment continues to rise more slowly than the population amid signs that wage pressures may be easing. During a press conference, Governor Macklem said it was too early to consider lowering rates as more time was needed to ensure inflation fell toward the 2% target.
source: Bank of Canada
