Bank of Canada leaves benchmark rate intact at 5%

The Bank of Canada left its target for the overnight rate intact at 5% at its April meeting, in line with market expectations.

The central bank pledged to keep reducing its balance sheet, as policy makers again underscored upside risks to inflation.

The BoC said that while price pressures had eased across a range of goods and services since its March meeting, the uncertain economic backdrop and higher-than-anticipated commodity prices prevented a smoother convergence of disinflation.

The central bank said it expected inflation to stay close to the 3% level in the first half of 2024 before easing to the 2% target in 2025.

In its quarterly monetary policy report, the BoC also raised its 2024 economic growth forecast to 1.5% from 0.8% it had projected in January.

“The outlook for GDP growth is revised up, mainly due to stronger-than-expected population growth in 2024,” the BoC noted.

The Canadian Dollar was last 0.62% weaker against its US counterpart on Wednesday, with the USD/CAD currency pair trading at 1.3655.

The US Dollar advanced in the wake of a hot CPI inflation print, which prompted investors to pare bets the Federal Reserve will begin reducing interest rates in June.