January 2024 Bank of Canada Rate Announcement

Decoding the Latest Move by Bank of Canada: Holding Steady in 2024

The recent announcement from the Bank of Canada has brought forth a new chapter in the financial narrative. In a move that wasn’t entirely unexpected, the Bank opted to maintain the status quo, holding rates steady.  There was a significant shift in the language used, downplaying the likelihood of additional rate hikes and indicating the potential for rate cuts.

Confidence in Inflation

Senior Deputy Governor Carolyn Rogers shared insights, revealing the Bank’s confidence in the ongoing trajectory of inflation. The focal point has shifted from contemplating rate hikes to strategically considering “how long” rates will remain anchored at 5%.

Steady Path of Higher Interest Rates

Governor Tiff Macklem emphasized the need to give the current higher interest rates ample time to produce their intended effects. The pertinent question now becomes: When will the economic stage see a transition from the high-rate performance to a potential adjustment? Historical indicators suggest a timeframe ranging from a few months to over a year, lending stability to the decision. Predictions within the forward market add an analytical layer to the narrative.

Market Reactions and Upcoming Reports

Traders had been anticipating four Bank of Canada rate adjustments by Christmas, starting in June. Post-announcement, market fluctuations were relatively muted. The 5-year bond and CMB yields experienced a 5 bps rise after the Bank’s statement. 📈 The upcoming CPI report on Feb. 20, alongside the USA’s GDP and PCE data, has become the focal point of the financial community’s attention.

Insights from Macklem

Macklem directs attention to Canadian GDP, which faced challenges in 2023. The standout element is the deliberate tightening of spending by Canadian consumers, strategically applied to alleviate building price pressures. 🛒💰

Housing Front and Inflation Journey

Mortgage rates remain a wildcard, contributing to inflation. Acknowledging this challenge, the Bank hints at looking through it, emphasizing a broader economic perspective. 🏡💡 Monthly CPI numbers are crucial for those keen on understanding the nuanced inflation journey.

Risks and Rate-Cut Possibilities

Within the broader landscape of potential risks that could influence inflation, the intriguing buzz suggests that economic deterioration might prompt a rate-cut cycle this year.

Financial Stability and Borrowing Insights

For borrowers prioritizing financial stability, opting for a hybrid or a 2 to 3-year fixed term could offer a pragmatic choice, aligning with the Bank’s steady approach rather than embracing the uncertain variable wave.


The Bank of Canada’s decision to hold rates steady in 2024, while not a shock, sets the stage for a calculated and strategic approach in navigating the evolving economic landscape. Join us as we analyze and navigate the steady currents ahead!

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