The Bank of Canada is expected to hold its trendsetting overnight interest rate at its current level of 5% when the central bank announces its latest policy decision today (September 6).
A majority of economists are forecasting that the central bank will hold interest rates steady as recent data shows the Canadian economy is slowing down.
Statistics Canada recently reported that gross domestic product (GDP) in this year’s second quarter registered no growth from the previous first quarter.
At the same time, Canada’s unemployment rate has risen for three consecutive months, reaching 5.5%.
Despite the slowdown, Canada’s inflation rate rose in July, advancing 3.3% on a year-over-year basis. However, most of the July increase was due to volatile energy prices creeping upwards.
At 5%, the Bank of Canada’s overnight interest rate is currently at its highest level since 2001.
The overnight rate is the interest rate at which Canada’s commercial banks borrow and lend money to each other on a one-day basis.