BoC holds key interest rate steady as speculation shifts to timing of rate cuts

OTTAWA — The Bank of Canada ended the year with another interest rate hold as the economy slows and forecasters speculate on the timing of rate cuts in 2024. The central bank announced its decision to keep its key interest rate steady at five per cent Wednesday, encouraged by evidence that higher rates are helping bring inflation down. “Higher interest rates are clearly restraining spending: consumption growth in the last two quarters was close to zero, and business investment has been volatile but essentially flat over the past year,” the central bank said in a statement detailing its final decision of the year. The combination of weaker growth and a cooling job market suggests demand is no longer outpacing supply in the economy, the central bank added. This slowdown, the Bank of Canada has argued, is necessary to restore price stability. The decision Wednesday carried few surprises as it marked the third consecutive time the Bank of Canada has opted to keep its key rate unchanged. But as financial markets place their bets on when the central bank may start cutting rates — and Canadians eagerly await that turning point — the central bank is giving no hints on when that may happen.