UPDATE: 7:12 a.m.
The Bank of Canada continued to hold its key interest rate steady at five per cent today, encouraged by evidence that higher rates are helping bring inflation down.
In a news release, the central bank says higher borrowing costs are clearly restraining spending as consumption and business investment remain relatively flat this year.
Today marks the third time in a row the central bank has opted to hold its key rate steady as forecasters widely expect the Bank of Canada’s next move will be lowering rates.
However, the Bank of Canada is not ruling out future rate hikes, warning its governing council remains prepared to raise rates further, if needed.
Weighed down by higher borrowing costs, the Canadian economy has struggled to consistently grow this year.
Meanwhile, inflation has eased considerably over the last year, reaching 3.1 per cent in October.
ORIGINAL: 6:25 a.m.
The Bank of Canada is set to announce its interest rate decision this morning as forecasters widely expect the central bank to continue holding its key rate steady.
The Bank of Canada opted to maintain its key interest rate at five per cent at its last two announcements as the economy shows clearer signs of a slowdown.
Last week's GDP report showed the economy shrank in the third quarter, while the country's unemployment rate ticked up once again in November.
Inflation in Canada has also slowed considerably, with the annual rate coming in at 3.1 per cent in October.
As the economy softens and inflation comes down, economists will be watching for any signs from the central bank on when to expect future interest rate cuts.
So far, the central bank has dismissed any talk of rate cuts and instead maintained it's prepared to raise rates again if needed.