The Bank of Canada opted to leave interest rates unchanged today but maintained its hawkish bias, confirming it won’t hesitate to hike rates further if inflation doesn’t continue to trend downward.
Markets had widely expected the rate hold, which leaves the overnight target rate at 5.00% and prime rate at a 22-year high of 7.20%.
In its accompanying statement, the bank said it made the decision due to “recent evidence that excess demand in the economy is easing, and given the lagged effects of monetary policy.”
However, the BoC added that it “remains concerned about the persistence of underlying inflationary pressures, and is prepared to increase the policy interest rate further if needed.”
Economists from National Bank noted that the “explicit threat to tighten further” was absent from the bank’s previous two announcements,…