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Bank of Canada left its interest rate unchanged in April meeting, reiterating that it’s premature to discuss turning to QE anytime soon.
The central bank left policy rates at 5.00% for the sixth time in a row, in line with market expectations. The BoC statement also referred to increasing growth estimates in 2024 and expected that inflation will hit its policy taget in 2025.
The statement added that Canadian economy is expected to restore balance by 2026 in addition to turning robust, “reflecting strong immigration”.
The bank also said: “Q1 output gap is estimated to be between -0.5% to -1.5%; potential output growth expected to slow from 2.5% in 2024 to about 1.6% on average over 2025 and 2026”.
It added that “For current wage growth to become compatible with 2% inflation target, productivity growth would need to increase substantially”.
