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La Bank of Canada maintains its key rate at 5%

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The Governor of the Bank of Canada, Tiff Macklem. (Archive photo)

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As it did in September and October, the Bank of Canada announced Wednesday morning that it was maintaining its key rate at 5%.

In comments accompanying its decision, the Bank of Canada wrote that the slowing economy is reducing inflationary pressures for a growing range of goods and services.

This reduction in pressures, combined with the fall in gasoline prices, contributed to the decline in inflation measured by the consumer price index , which stood at 3.1% in October. However, the increase in housing costs has increased, reflecting faster growth in rents and other housing costs, as well as the continued contribution of high mortgage interest.

Over the past few months, the central bank's preferred measures of core inflation have hovered around 3.5 to 4 percent, and October's data is at the lower end of that range, the central bank adds.

The institution notes that there are more signs that monetary policy is restraining spending and easing price pressures, which explains why it decided to maintain its key rate at 5%.

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The Bank of Canada still remains concerned about the risks surrounding the inflation outlook and remains ready to increase to new its key rate if necessary.

The Governing Council wants to see core inflation continue to fall in a sustainable manner. It is still closely monitoring the balance between supply and demand, inflation expectations, wage growth and business pricing practices, writes the Bank of Canada, which raised its key rate to 10 recoveries since the start of 2022 in order to bring inflation back to an annual range of 2 to 3%.

Clouds have been gathering over the Canadian economy since September. The national unemployment rate increased 0.1% in November to 5.8%. The unemployment rate was 5% in April.

The Canadian economy may have created 25,000 jobs in November, but population growth outpaced the job creation.

On November 30, Statistics Canada revealed that the Canadian economy contracted by 1.1% on an annual basis in the third quarter of 2023.

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