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OTTAWA, Oct 25 - The Bank of Canada on Wednesday held its key overnight rate at 5.0% as expected and forecast weak growth, while leaving the door open to more rate hikes to tame inflation that could stay above target for another two years.
"There is growing evidence that past interest rate increases are dampening economic activity and relieving price pressures," the Bank of Canada said in a statement.Inflation is expected to return to the 2% target by the end of 2025, slightly later than July's forecast of mid-2025,"but the near-term path is higher because of energy prices and ongoing persistence in core inflation", the BoC said.
The Bank cut its 2023 growth estimate to 1.2% from 1.8% in July and said 2024 growth would be 0.9%, down from a previously forecast 1.2%. "Governing Council is concerned that progress towards prices stability is slow and inflationary risks have increased, and is prepared to raise the policy rate further if needed," the BoC said.
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