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Essentials of Monetary Policy

Long Awaited Central Bank Pause Officially Begins

March 8, 2023
Marc Desormeaux
Principal Economist

The Bank of Canada held its policy rate steady at 4.5% today as was widely anticipated by forecasters. It reiterated that it expected to hold the policy interest rate at its current level, conditional on economic developments evolving broadly in line with its forecasts. The question now is how Canada’s heavily indebted economy responds following months of aggressive monetary tightening. How strongly and how quickly an economic slowdown comes will determine how inflation moves and whether the Bank continues to stick to its plan.

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