Unpacking the Bank of Canada’s decision (and why a rate cut is unlikely anytime soon)

To no one’s surprise, the Bank of Canada held its key interest rate steady at 5% for a second consecutive time as recent data points to easing inflation, consumers cutting back on retail spending and a slowing economy in general. However, with inflation still at 3.8% — above the central bank’s target of 2% — it’s unclear how long this pause will last. 

Scotiabank’s Chief Economist Jean-François Perrault is back this episode to break down what drove the Bank of Canada’s latest decision, why Canadians should not expect rates to go down anytime soon, and how geopolitical tensions may also impact inflation. 

Key moments this episode: 

00:48 — JF’s main takeaway from the recent Bank of Canada decision 

1:34 — Is there an indication in the statement today that the bank might take more action? 

2:39 — What were the driving factors behind the latest decision? 

4:22 — Breaking down where we stand in terms of inflation, have the bank’s hikes worked? 

5:36 — What impact does the Israel-Hamas war on the central bank’s decisions going forward? 

6:28 — What impact do current global issues have on a potential recession? 

7:42 — If you need to, say, renew your mortgage in the next few months, what should you make of all this? 

8:49 — Rate cuts: when will they happen? 

9:53 — JF boils down this latest decision to 3 main takeaways 

11:05 — It’s been about 18 months since the first Bank of Canada hike, looking back, is it working?