The Bank of Canada today held its target for the overnight rate at 5%, with the Bank Rate at 5¼% and the deposit rate at 5%. The Bank is also continuing its policy of quantitative tightening.

• Inflation in advanced economies is decreasing, but core inflation remains high, so central banks are focused on price stability.

• Global growth slowed in Q2 2023, mainly due to a slowdown in China. Weakness in China's property sector has lowered growth prospects.

• The U.S. saw stronger-than-expected growth, driven by robust consumer spending. Europe's service sector supported growth, offsetting manufacturing contraction.

• Global bond yields have risen due to higher real interest rates, and international oil prices are higher than expected.

• Canada's economy is experiencing weaker growth, which is necessary to ease inflationary pressures.

• Q2 2023 saw a 0.2% annualized contraction in output due to weak consumption, declining housing activity, and wildfires.

• Household credit growth slowed due to higher rates, and the labor market has gradually eased.

• CPI inflation was 3.3% in July, with core inflation at around 3.5%, indicating persistent inflationary pressures.

• The Bank of Canada held the policy interest rate at 5% and will continue normalizing the balance sheet.

• The bank is concerned about persistent inflation but will increase rates if needed to achieve the 2% inflation target.

• They will monitor core inflation, excess demand, inflation expectations, wage growth, and corporate pricing behavior to maintain price stability for Canadians.