Bank of Canada Governor Tiff Macklem reads his notes as he waits to appear at the Senate Committee on Banking, Commerce and the Economy, in Ottawa, on Nov. 1.Adrian Wyld/The Canadian Press

Jeremy Kronick is associate vice-president, and director of the Centre on Financial and Monetary Policy at the C.D. Howe Institute, where Steve Ambler, a professor of economics, University of Quebec at Montreal, is the David Dodge Chair in Monetary Policy.

The Bank of Canada surprised no one by holding its target for the overnight lending rate at 5 per cent on Wednesday. Last week’s releases by Statistics Canada showing a decline in third-quarter GDP and an uptick in the unemployment rate sealed the deal.

Nevertheless, the announcement made it clear that the bank is not satisfied with the pace at which inflation is falling, stressed that the fight against inflation is not yet won, and stated that they stand ready to boost rates again if inflation numbers disappoint.

It’s clear that the bank is concerned about inflation expectations becoming de-anchored from the 2-per-cent target. They continue to prioritize re-establishing any credibility they lost in 2022 when they promised to keep rates low (they were 0.25 per cent at the time), and want........

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