The Bank of Canada, adhering to its policy of quantitative tightening, today announced the retention of its target for the overnight rate at 5%, alongside a Bank Rate of 5¼% and a deposit rate of 5%. This decision comes against a backdrop of a slowing global economy and easing inflationary pressures.

Highlighting the global context, the Bank stated, "The global economy continues to slow and inflation has eased further." In the United States, the scenario is mixed with "stronger than expected" growth led by consumer spending, yet a likely weakening on the horizon as past policy rate increases take effect. 

Europe is experiencing weakened growth and reduced inflationary pressures, partly due to lower energy prices, with oil prices now around "$10-per-barrel lower than was assumed in the October Monetary Policy Report (MPR)."

In Canada, the economic landscape reflects a challenging phase. The Bank noted a stall in growth, where "Real GDP contracted at a rate of 1.1% in the third quarter, following growth of 1.4% in the second quarter." High interest rates have played a significant role, clearly restraining spending, as consumption growth hovers near zero and business investment remains largely flat. 

The labor market shows a cooling trend, with the Bank observing slower labour force growth in job creation and a "modest" rise in unemployment, though wages continue to increase by 4-5%.

On the inflation front, the Bank reported a decrease in CPI inflation to 3.1% in October. However, it noted a rise in shelter price inflation, driven by rent and housing costs, alongside ongoing high mortgage interest rates. The Bank's preferred core inflation measures are currently around 3½-4%, with recent data leaning towards the lower end of this range.

Concluding its assessment, the Bank asserted, "With further signs that monetary policy is moderating spending and relieving price pressures," it decided to hold the policy rate steady.

The Governing Council remains cautious about inflation risks and "remains prepared to raise the policy rate further if needed." 

The next scheduled date for announcing the overnight rate target is January 24, 2023.