The Bank of Canada held its key interest rate steady at five per cent today, citing recent evidence that suggests the economy is weakening.

The central bank says it decided not to raise its key rate given demand in the economy is slowing and previous rate hikes need more time to take effect.

Forecasters were widely expecting today’s decision after recent data showed the economy shrank in the second quarter, while the unemployment rate has been on the rise for three consecutive months.

The announcement comes after the Bank of Canada raised interest rates at its last two meetings, bringing a previous pause on rate hikes to an end.

In a news release today, the central bank says its governing council is still concerned about inflationary pressures and is ready to raise interest rates further if needed.

Canada’s inflation rate was 3.3 per cent in July, ticking up from the previous month, and is expected to remain around three per cent for the rest of the year.

This report by The Canadian Press was first published Sept. 6, 2023.