The Bank of Canada continued to hold its key interest rate at five per cent today and said it has begun to see the economic conditions necessary to lower interest rates.

Governor Tiff Macklem says economic data since January has improved the central bank’s confidence that inflation will continue to slow, even as economic growth picks up.

The governor says while the Bank of Canada is seeing the evidence it needs to begin lowering interest rates, it needs to see price pressures ease for longer to make sure the decline in inflation is sustained.

Economists were widely expecting the central bank to hold its policy rate today and deliver the first rate cut in June.