Bank of Canada left 5% overnight rate unchanged, RBC expect it'll stay there through 2023

<p>The decision was expected by markets:</p><ul><li><a href="https://www.forexlive.com/centralbank/bank-of-canada-holds-rates-at-500-as-expected-20230906/" target="_blank" rel="follow" data-article-link="true">Bank of Canada holds rates at 5.00% as expected</a></li></ul><p>From RBC's response, analysts at the bank note that while headline CPI has slowed, the BoC's preferred core measure remains persistently above the 2% target. Inflation is likely to gain in the near term:</p><ul><li> Wage growth is still high</li><li>oil prices higher in recent weeks</li></ul><p>RBS note that rates are now at a level the BoC sees as restrictive, </p><ul><li>enough to put downward pressure on economic growth and inflation pressures over time</li></ul><p>And indeed that the impacts of hikes already are still building.</p><p>RBC conclude that the BoC is still </p><ul><li>highly data-dependent and won't hesitate to push interest rates higher if necessary to return inflation to the 2% target rate</li></ul><p>But forecast </p><ul><li>the recent soft-patch in economic data will continue, and look for the overnight rate to hold where it is through the end of this year</li></ul>

This article was written by Eamonn Sheridan at www.forexlive.com.