The Bank of Canada maintains its interest rate schedule

According to the central bank, the violence in Gaza has increased geopolitical uncertainty and driven up oil prices since July.

The Bank of Canada declared that it will continue its quantitative tightening program on Wednesday while maintaining the same interest rates.

With the bank rate at 5.25% and the deposit rate at 5%, the overnight rate objective was kept at 5%.

“The global economy is slowing and growth is forecast to moderate further as past increases in policy rates and the recent surge in global bond yields weigh on demand,” the Federal Reserve stated in a statement.

According to the bank, growth in the global economy is forecast to be 2.9% this year, 2.3% in 2024, and 2.6% in 2025. It also noted that although economic activity in China is less than anticipated and growth in the euro area has slowed further, the US economy is showing signs of strength.

Most economies have seen a decrease in inflation as supply constraints loosen and price pressures are lessened due to decreased demand. However, central banks are nonetheless on guard since underlying inflation is still present. The battle in Israel and Gaza is a fresh source of geopolitical concern, and oil prices are higher than was anticipated in July,” it continued.

According to the central bank, Canada’s previous interest rate hikes have reduced economic activity and eased pricing pressure.

“There is less demand for homes, durable goods, and many services, and there has been a slowdown in consumption. Business investment is being hindered by weaker demand and rising borrowing costs, according to the statement.

After averaging 1% growth over the previous year, the bank predicted that Canada’s economic growth would stay poor in 2019 and then pick up in late 2024 and early 2025.

It now predicts that the GDP will expand by 1.2% this year, 0.9% in 2024, and 2.5% in 2025.

According to the report, consumer inflation would likely average roughly 3.5% through the middle of the next year before progressively declining to 2% in 2025.

Although it was much lower than the 8.1% witnessed last summer, annual consumer inflation in the North American region slowed to 3.3% in July before rising to 4% in August.