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# Bank of Canada holds overnight rate at 5% amid concern over persistent underlying inflation
- URL: https://www.theglobalbanker.com/bank-of-canada-holds-overnight-rate-at-5-amid-concern-over-persistent-underlying-inflation/
- Published: 2024-03-06T17:03:00.000Z
- Updated: 2026-11-03T22:26:20.000Z
- Description: The Governing Council kept its policy rate unchanged at its second decision of 2024, saying it wanted to see further and sustained easing in core inflation.
- Author: TGB Editorial Team
- Tags: Central Banks, Americas, #archive

The Bank of Canada held its target for the overnight rate at 5% on 6 March 2024, with the Bank Rate at 5.25% and the deposit rate at 5%, and said it would continue to normalise its balance sheet. The rate has been at 5% since July 2023.

The decision was the bank's second of the year, following a hold on 24 January. The Governing Council said it remained concerned about risks to the outlook for inflation, particularly the persistence in underlying inflation, and wanted to see further and sustained easing in core inflation.

#### UNDERLYING INFLATION STILL PERSISTENT

Consumer price inflation eased to 2.9% in January as goods price inflation moderated. Shelter price inflation remained elevated and was the biggest contributor to inflation, while the bank's preferred measures of core inflation were in the range of 3% to 3.5%. The bank said it continued to expect inflation to remain close to 3% during the first half of 2024 before gradually easing.

The council said it would continue to monitor the balance between demand and supply in the economy, inflation expectations, wage growth and corporate pricing behaviour.

#### ECONOMY IN MODEST EXCESS SUPPLY

The Canadian economy grew by 1% in the fourth quarter of 2023, after contracting by 0.5% in the third quarter. Consumption grew modestly, by 1%, while business investment declined. Employment continued to grow more slowly than the population, and there were signs that wage pressures may be easing. The bank said the economy was in modest excess supply.

Globally, the bank noted that growth slowed in the fourth quarter, although US GDP growth remained robust. Its next scheduled rate announcement is on 10 April 2024.