BOC decomposes to maintain interest rates! Will this step continue?


 Bank of Canada on Wednesday chose to maintain overnight rates at 4.50% as expected, becoming the first central bank to suspend aggressive action in hindering inflation, as price pressure decreased as predicted.

Over the past year, the bank raised eight consecutive rates of 425 basic points to tame inflation, which peaked at 8.1% last year and slowly to 5.9% in January, still three times the target of 2%.

When the Bank last met to set a policy in January, it announced a 25 -point increase and informed it that the rate had not changed temporarily to allow the previous increase to absorb, as long as the price was slow in its expectation.

"Overall, the latest data remains in line with the Bank's expectations that INFLATION OF CPI will drop to about 3% in the middle of the year," the bank said in a statement.

"The Administrative Council will continue to evaluate the economic development and the impact of past interest rates, and be prepared to increase policy rates if necessary to restore inflation to 2%target," the statement said.

Prior to the announcement, the money market had expected policy rates to remain unchanged but pricing in other tightening by September.

In the statement, the bank acknowledged that the fourth quarter's growth was below its expectations, and dropped a language that said the economy was in "excessive demand", the word used twice when it announced the January rate increase.

The central bank also informed the core inflation measures and short -term inflation expectations still need to fall to restore inflation to the target.