(OTTAWA) The Bank of Canada considered raising interest rates earlier in April amid concerns it would be too slow to react to persistent inflation.

In its summary of deliberations released on Wednesday, the central bank said the main reasons its governing board was considering another rate hike were the resilience of economic growth, the potential difficulty of pushing inflation from 3% to 2 % and the risk of waiting too long to respond to persistent inflationary pressures.

The central bank seems optimistic that inflation will slow to 3% by the middle of the year, but fears that the return to 2% will take longer as prices for services remain high.

In the end, the Bank of Canada kept its key rate at 4.5% on April 12, and decided to wait for further economic data to determine whether rates should rise further.

“The (Governing) Board has therefore decided to maintain the target for the overnight rate at 4.5% and to continue to assess whether monetary policy is tight enough to allow inflation to return to the target of 2 %,” said the Bank of Canada.

The Bank of Canada earlier this year announced its intention to suspend its aggressive rate hike cycle, noting that it does not plan to raise its key rate again unless inflation and the economy are weak. stronger than expected.

At the time of its interest rate decision, inflation had slowed to 5.2% in February. The latest data shows that inflation continued this trajectory, standing at 4.3% in March.

Although the potential challenges ahead did not convince the Bank of Canada to raise interest rates, it left the door open for further rate hikes and warned that Canadians should not anticipate cuts. rate this year.

“Members (of the board) agreed that while a deeper downside risk remained, based on their current outlook, a rate cut later this year did not appear to be the most plausible scenario,” said underlined the bank on Wednesday.

The decision to maintain its key interest rate comes as the economy is showing stronger than expected. This is despite the fact that the Bank of Canada’s key interest rate is at its highest level since 2007, making borrowing more expensive for Canadians and businesses.

The labor market is also robust, with businesses continuing to hire. Canada’s unemployment rate remained at 5% in March, hovering near record lows.

Although the jobs added in recent months seem puzzling, economists have noted that strong population growth explains some of the strength in the labor market.

The Bank of Canada also made this point in its summary of proceedings.

“In this context, there was perhaps no reason to be surprised at the high number of hirings in the previous months, revealed by the Labor Force Survey. Faster population growth would perhaps translate into stronger employment growth than the historical trend, without fueling tensions in the labor market,” the Bank of Canada said.