In a recent decision, the Bank of Canada has chosen to hold off on interest rate hikes, according to a summary of deliberations revealed on Wednesday. The document offered insights into the multitude of factors that influence such decisions, including a sluggish decrease in core inflation and certain transient factors that continue to impact the economy.
Despite indications of economic weakness, inflation remains persistently high, particularly in the core measure. This was among the key concerns highlighted in the bank’s deliberations. The bank’s precise choice of language in its deliberations further underscored its concern over these issues.
Dylan Smith, a senior economist at Rosenberg Research, indicated that data interpretation is currently challenging due to these factors, as it does not show a clear economic trend. Smith noted that the tone of the bank’s recent deliberations was somewhat lukewarm, potentially suggesting that additional rate hikes might be on the horizon.
If inflation continues to persist at its current level and there is a slight recovery in growth figures, further rate hikes may be necessary. Smith posits that this move would not only reinforce the strong signal that the Bank of Canada is sending but also indicate that it is not necessarily done with its rate adjustments.
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