The Bank of Canada (BoC) has decided to hold its key interest rate at 5 per cent, with the bank rate at 5.25 per cent and the deposit rate at 5 per cent.

The decision came on Wednesday at 9:45 a.m. and was the first of this year.

Bank of Canada maintains policy rate, continues quantitative tighteninghttps://t.co/GlP0DsXUWv#economy #cdnecon

— Bank of Canada (@bankofcanada) January 24, 2024

The Bank said it is "continuing its policy of quantitative tightening."

It noted that the Canadian economy has stalled since mid-2023, and no growth should be expected through the first quarter of 2024.

"Consumers have pulled back their spending in response to higher prices and interest rates, and business investment has contracted. With weak growth, supply has caught up with demand, and the economy now looks to be operating in modest excess supply," the Bank shared. "Labour market conditions have eased, with job vacancies returning to near pre-pandemic levels and new jobs being created at a slower rate than population growth. However, wages are still rising around 4 per cent to 5 per cent."

Canada's central Bank held the key interest rate at 5 per cent in the last update in December.

It was the third consecutive rate hold of the year after Canadians saw seven interest rate hikes in 2022. In January 2023, another increase followed, bringing the key rate to 4.5 per cent.

The Bank held its key rate at 4.5 per cent — precisely as experts predicted — until June 7, when it was raised to 4.75 per cent. On July 12, the BoC brought the key rate to 5 per cent, with the bank rate at 5.25 per cent, and on September 6, it announced that it was holding those rates.

In a recent report, Oxford Economics researchers said they believe the 5 per cent key rate will be held until the middle of 2024, when the BoC will trigger a cycle that lowers the rate.

On January 16, Statistics Canada's Consumer Price Index showed that inflation had risen once again in Canada to 3.4 per cent, which squashed hopes of an early dip in the rate but didn't necessarily ring alarm bells for a possible hike.

With this in mind, industry experts were almost sure another rate hold was coming.

Ratehub.ca Co-CEO and president of CanWise mortgage lender James Laird shared his thoughts and expectations with Daily Hive.

Despite a rate hold, he advises homeowners with a variable-rate mortgage or home equity line of credit (HELOC) to read the Bank's language closely "to see if a rate hike or rate cut is more likely moving."

"With upward pressure on fixed rates, getting a pre-approval is a great idea," he advised.