Despite record inflation, Bank of Canada holds rates steady—for now

The Bank of Canada has decided not to raise its benchmark interest rate just yet.

Like many other central banks around the world, the bank slashed its core lending rate — known as the target for the overnight rate — at the onset of the COVID-19 pandemic in March 2020 to ensure that consumers and businesses had access to cheap lending.

But two years of rock-bottom lending rates have been a major contributor to inflation, which rose to almost five per cent in Canada last month — its highest level in over 30 years.

That prompted expectations that the bank would need to start raising its rate soon. Yet it has elected to keep its rate at 0.25 per cent, the same level it’s been for the last 670 days.

But the bank did make clear that it could change tack in the very near future.