Bank of Canada is expected to maintain the rate on Wednesday, becoming the first of the world's major central bank to stop the tightening of monetary, after economic growth stopped in the fourth quarter last year.
When the last time the bank met to set the policy in January, it raised the rate of 25 basic points, as expected, to 4.50%, and said it would try to let the rate unchanged for a while.
Over the past year, the bank raised 425 basic points to tame inflation, which peaked at 8.1% and slowly to 5.9% in January, still three times the target of 2%.
"We expect the Bank of Canada to be the first G10 central bank to hold the rate," said Jay Zhao-Murray, forex analyst at Morex Canada.
The majority of the 32 economists reviewed by Reuters last week said Bank of Canada (BOC) would likely maintain rates until the end of this year, and all of them predicted that the bank would continue to hold aggressive action on Wednesday.
Although some data have been strong since the bank's last policy meeting, including the January job report, gross domestic product stopped in the fourth quarter. It is much weaker than the 1.3% annual growth projection by BOC.
"Bank of Canada is expected to use GDP growth arguments and slow inflation in justifying its decision to maintain rates," said Royce Mendes and Tiago Figueiredo, Economist Desjardins.
"The central bank is not likely to do much to support the view that further rates will be needed," the economist added.
Macklem has opened the door to raise rates, but he also said that if inflation dropped as the bank predicted, higher loan costs would not be needed.
Macklem said in January inflation would slow down to about 3% by mid-year, and then reached 2% by 2024. He also said he expected almost zero growth for the first three quarters of 2023.
