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The Bank of Canada is keeping its key interest rate target on hold at its rock-bottom level of 0.25%.

In a statement, the central bank also said Wednesday it doesn’t expect to raise the trendsetting rate until sometime between April and September next year, which is unchanged from its previous guidance.

The Bank of Canada also warned that high inflation rates will continue through the first half of next year, noting that it won’t be until the second half of 2022 that inflation falls back toward its comfort zone of between 1% and 3%.

By the end of next year, the bank is forecasting the annual inflation rate to fall to 2.1%.

The bank said it is keeping a close eye on expectations for price and wage growth to make sure they don’t create a spiral of price increases.

“The bank is closely watching inflation expectations and labour costs to ensure that the forces pushing up prices do not become embedded in ongoing inflation,” it said in announcing its interest rate decision.

Jordan Damiani, a senior wealth advisor with Meridian Credit Union in St. Catharines, Ont., said he was looking for information on when rate hikes might start in the new year and how aggressive those might be versus “letting inflation run hot.”

“One of the things that surprised me was even though we’ve seen an acceleration of inflation, [the Bank of Canada] still expects that inflation is going to be elevated,” he said.

For Damiani, the most telling line was where the central bank said it will seek to avoid inflation pressure becoming “embedded.”

The last scheduled rate announcement for 2021 came amid a flurry of strong, recent economic indicators.

Statistics Canada reported last week that the economy grew at an annualized rate of 5.4% in the third quarter of the year, a hair below what the Bank of Canada forecast in October.

The bank noted in its statement that the growth brought total economic activity to within about 1.5% of where it was in the last quarter of 2019 before Covid-19.

Similarly, the labour market had a stronger-than-expected showing in November, pushing the share of core-age workers with a job to an all-time high and leaving the unemployment rate 0.3 percentage points above its pre-pandemic level in February 2020.

All of that suggests the economy had “considerable momentum into the fourth quarter,” the central bank said.

Still, the central bank noted that headwinds from devastating floods in British Columbia and uncertainties from the omicron variant that “could weigh on growth by compounding supply chain disruptions and reducing demand for some services.”

In a research note Wednesday, RBC senior economist Josh Nye said there’s a risk the economy reaches full capacity sooner than the central bank expects.

“The BoC was held back by omicron uncertainty but today’s statement suggests that as long as that risk doesn’t intensify in the next seven weeks, the BoC will sound more hawkish in January,” Nye wrote.

“Markets are now pricing roughly 50/50 odds of a rate hike at that meeting though we think it’s more likely the BoC will signal upcoming rate hikes rather than actually raising rates in January.”

Damiani said he expects that monetary policy will likely remain accommodative in 2022, but added, “It is still likely we will see multiple rate hikes.”

The language from the central bank “really pointed toward oil prices” as one factor, and “I think if oil prices continue to rise, you could probably see rate hikes earlier.”

For clients, Damiani’s messaging is “we’re going to have a year that looks a lot like 2021,” and he expects small businesses to struggle most.

Portfolio diversification and inflation-proofing will remain key, he said, warning against holding too much cash or securities that will have low returns relative to inflation.

If clients are fearful of markets, he said, remind them that there’s no “perfect time” to jump in.

Due to investing being “uncomfortable for the last 18 months, there are going to be a lot of people still sitting on the sidelines,” Damiani said, but “you don’t want [clients] to derail retirement by timing markets and not being properly allocated.”