Bank of Canada decision: Rates held unchanged at 5.00%, as expected

<ul><li>Prior overnight rate was 5.00%</li><li>BOC sees "clearer signs that monetary policy is moderating spending and relieving price pressures"</li><li>"There is growing evidence that past interest rate increases are dampening economic activity and relieving price pressures"</li><li>BOC repeated that it " is prepared to increase the policy interest rate further if needed"</li><li>Sees inflation returning to 2% at the end of 2025 vs "mid-2025" previously</li><li>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</li><li>Weaker demand and higher borrowing costs are weighing on business investment</li><li>The surge in Canada’s population is easing
labour market pressures in some sectors while adding to housing demand
and consumption</li><li>The labour market remains on the tight side and wage pressures persist</li><li>a range of indicators suggest that supply and demand in the economy are now approaching balance</li><li>The BOC projects global GDP growth of 2.9% this year, 2.3% in 2024 and 2.6% in 2025, little changed from previously</li><li>Growth in the euro area has slowed further</li></ul><p>New forecasts:</p><ul><li>Cuts 2023 growth forecast To 1.2% vs prior 1.8%</li><li>2024 to 0.9% vs 1.2% prior</li><li>2025 to 2.5% vs 2.4% prior</li><li>2023 inflation to 3.9% vs 3.7% </li><li>2024 inflation to 3.0% vs 2.5% prior</li><li>2025 inflation to 2.2% vs 2.1% prior</li></ul><p>USD/CAD was trading at 1.3772 just ahead of the decision and rose to 1.3793 afterwards. The overt hawkish bias is still there but all the commentary points to a slowing economy.</p><p>Macklem and Rogers will hold a press conference at 11 am ET</p>

This article was written by Adam Button at www.forexlive.com.