Bank of Canada holds key interest rate at 5% for second time

The Bank of Canada held its key interest rate steady at five per cent today, noting there are clearer signs of the economy cooling and inflation easing.

However, it warns that it is prepared to increase rates further if necessary.

The central bank says it's still concerned that price growth is easing too slowly and that the inflation rate has been volatile in recent months.

Forecasters widely expected the rate hold as economic data suggests high interest rates are already causing an economic pullback.

New economic projections released by the central bank suggest economic growth will continue to be weak well into next year before picking back up in late 2024.

Inflation is still expected to return to the central bank's two per cent target in 2025, however, the central bank says it expects inflation to be higher in the short term.