Bank of Canada maintains policy rate. Global economic growth continues to slow. US economy anticipated to slow down in 2024. Euro looks like to be a mild contraction. China low consumer confidence and policy uncertainty will likely restrain activity. Oil prices lower than assumed in October.

Canada economy stalled since mid-2023 and close to zero growth expected in first quarter 2024. Consumers have pulled back spending, business investment has contracted and labour market conditions have eased, with job vacancies returning to near pre-pandemic levels.

However, wages are still rising. Shelter costs remain the biggest contributor to above-target inflation. The Bank is concerned about the persistence in underlying inflation and wants to see further and sustained easing in core inflation. The Bank current prediction in reaching its coveted ‘2% target’ is now 2025.

So, it’s a little of a grim picture with the economy, but this paints low likelihood of rate increases. Timing of rate cut predictions is dynamic, but certainly the Bank prefers not to operate with sudden moves. We can also watch what the US Fed is doing to get better sense of rate sentiment and direction.

Next BoC meeting is March 6, 2024. US Fed will make their next rate announcement Jan 31, 2024.