Bank of Canada holds interest rate as economy weakens, inflation cools | FULL

The Bank of Canada left its benchmark interest rate unchanged at 5.0 per cent on Wednesday, amid signs of cooling in the economy and easing in inflation. The hold was widely expected by economists and market watchers heading into the decision.

"We don't want to cool the economy more than necessary, but we don't want Canadians to have to continue to live with an elevated inflation either. And we cannot let high inflation become entrenched in the economy," Bank of Canada governor Tiff Macklem said, providing an explanation for the central bank's decision.

The Bank of Canada has rapidly raised its target for the overnight rate — a benchmark for other interest rates on loans like mortgages — by 4.75 percentage points since March 2022. According to experts, this was to tamp down rampant inflation, raising the cost of borrowing for businesses and consumers alike and limiting Canadians’ spending power as more money goes towards paying down debt.

Overall inflation has cooled significantly since the 40-plus-year highs seen last year, coming in at 3.8 per cent in September — still above the Bank of Canada’s two per cent target.

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