Bank of Canada holds key interest rate steady at 5%

The Bank of Canada is holding its key interest rate steady at five per cent for its final decision of the year.

This marks the third time in a row that the central bank has decided to hold its key rate steady, as evidence suggests higher rates are working to bring down inflation.

The central bank says in a news release that spending is being restrained by higher borrowing costs.

“Higher interest rates are clearly restraining spending: consumption growth in the last two quarters was close to zero, and business investment has been volatile but essentially flat over the past year,” the Bank of Canada said in the release.

Forecasters believe the central bank could be lowering rates next, but future rate hikes can not be ruled out yet as there is still concern about risks to the outlook for inflation.

READ MORE: Bank of Canada says key interest rate remains 5% amid weakening economy