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(Kitco News) The Bank of Canada held its key interest rate at 4.5% for the second meeting in a row. The move was largely expected and gold priced in Canadian dollars edged up.
The central bank cited cooling inflation while raising its growth forecast for 2023 and dropping recession warnings from its messaging.
"The Bank expects CPI inflation to fall quickly to around 3% in the middle of this year and then decline more gradually to the 2% target by the end of 2024," Canada's central bank said in a statement Wednesday.
Canada's inflation has been slowing down, coming in at 5.2% in February.
Economic growth in the first quarter was better than expected. "The Bank now projects Canada's economy to grow by 1.4% this year and 1.3% in 2024 before picking up to 2.5% in 2025," the statement said.
Canada's central bank is still not ruling out more rate hikes in the future, noting that getting inflation down to 2% could be difficult as service price inflation and wage growth remain elevated.
"Governing Council continues to assess whether monetary policy is sufficiently restrictive to relieve price pressures and remains prepared to raise the policy rate further if needed to return inflation to the 2% target," the statement said. "Quantitative tightening continues to complement this restrictive stance."
The Bank of Canada became the first major central bank to press pause on its tightening cycle last month. Governor Tiff Macklem told reporters that a pause would allow the previous eight rate hikes to make their way through the economy.
With no major surprises in the statement, gold priced in Canadian dollars edged up but was largely unchanged, last trading at $2,699.38, up 0.03% on the day.
