- Overnight rate vs 4.50% prior
- 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.
- 2023 GDP forecast 1.4% vs 1.0% prior
- 2024 GDP forecast 1.3% vs 1.8% prior
- Sees 2.5% GDP growth in 2025
- "Economic growth in the first quarter looks to be stronger than was projected in January, with a bounce in exports and solid consumption growth"
- Monetary Policy Report projects global growth of 2.6% this year, 2.1% in 2024, and 2.8% in 2025
- Previously forecast inflation would fall to around 3% in the middle of 2023 and back to target in 2024
- Inflation in many countries is easing
- Labour markets remain tight and measures of core inflation in many advanced economies suggest persistent price pressures, especially for services.
- Global economic growth has been stronger than anticipated
- US growth is expected to slow considerably in the coming months
- Full text of the statement
- Full text of the MPR
The market was pricing in a 95% chance of no change at today's meeting and all economists in the Reuters survey forecast no move.
Bank of Canada governor Macklem and senior deputy Rogers will host a press conference at 11 am ET.
This sums up how the BOC sees the economy evolving:
"As more households renew their mortgages at higher rates and restrictive monetary policy works its way through the economy more broadly, consumption is expected to moderate this year. Softening foreign demand is expected to restrain exports and business investment. Overall, GDP growth is projected to be weak through the remainder of this year before strengthening gradually next year. This implies the economy will move into excess supply in the second half of this year."
That certainly sounds like a central bank that's comfortably on the sidelines. The next question is: When will the cuts come?
USD/CAD is lower after the decision but that comes with improving (albeit choppy) broader sentiment after the US CPI report. Oil could be benefitting the loonie as it challenges the $83 zone of resistance.