Tight-lipped Bank of Canada holds key rate at 5%, says it's too early to cut rates

Governor Tiff Macklem, who held a news conference after the interest rate announcement, acknowledged that inflation has continued to ease and the economy is weakening.

The governor faced a barrage of questions from journalists on when the central bank might pivot to rate cuts. But Macklem held the line. Statistics Canada reported last week the economy grew at an annualized pace of one per cent in the fourth quarter. But that modest growth was largely due to a surge in exports, rather than a rise in domestic activity. On a per-capita basis, both real gross domestic product and consumer spending fell over the last three months of the year.

However, rapidly rising housing costs are standing in the way of getting inflation down even lower. In January, shelter prices were 6.2 per cent higher than they were a year ago. Its preferred core measures of inflation, which strip out volatility in prices, are still running between three and 3.5 per cent.

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