The Bank of Canada (BoC) maintained its policy rate at 5% for the fifth consecutive meeting, citing progress in inflation but cautioning against rate cuts yet. Governor Tiff Macklem emphasized the need for further evidence of sustained inflation toward the 2% target. The decision was in line with market expectations. Despite acknowledging some easing in wage pressures and below-potential economic growth, officials remain concerned about inflation risks and lagging employment gains.

The market anticipated potential rate cuts by July, while economists suggested June as more likely. The bank’s next decision is in April, with potential shifts dependent on economic indicators. Inflation, driven largely by elevated shelter prices, remains a key concern, with core price pressures stubbornly above 3%. Macklem emphasized the need to balance monetary policy to support economic growth without compromising progress in managing inflation.