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Special Report

Canada Monetary Policy
Research Brief

December 2023

Third Consecutive Rate Pause Providing Some
Optimism for Commercial Real Estate Investors

Central Bank holds policy rate unchanged. The Bank of Canada maintained its overnight rate at 5.0 per cent at its December meeting, marking the third consecutive rate pause. Stalling economic growth throughout the middle quarters of 2023, softening consumption and easing labour market conditions were the main reasons the Bank held the policy rate unchanged. The BoC did maintain a relatively hawkish tone — stating that it is still concerned about future inflation risks, and that it remains prepared to raise rates further if needed. However, the Bank did indicate that the economy is no longer in excess demand, and past rate hikes are restraining spending. As a result, this still-hawkish tone is likely due to future interest rate expectations, and the fact that policymakers may be wary of driving bond yields lower and prematurely loosening financial conditions. Nonetheless, it is still likely that the BoC’s next move will be an interest rate cut.

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