BNN BLOOMBERG POLL: Are you concerned about the Bank of Canada's latest rate hike?
overnight lending rate by 50 basis points to 3.75 per cent on Wednesday, less than the 75-basis-point move expected by markets and most economists. The central bank increased rates by three-quarters of a percentage point last month, and by a full percentage point in July.
“This tightening phase will draw to a close. We are getting closer, but we aren’t there yet,” Macklem told reporters during a press conference after the decision.“The Bank of Canada is growing confident that its actions so far will be enough to vanquish inflation although, by doing less than markets were pricing in, the bank risks sending too dovish a message that it will eventually have to reverse,” Stephen Brown, senior Canada economist at Capital Economics, said in a report to investors.
In a less dovish note, officials said inflation remains broad based, with data showing no “meaningful evidence” that underlying price pressures are easing. They again flagged risks of elevated inflation expectations becoming entrenched -- perhaps a signal they may be slowing the pace of hikes, but not the destination. And they cited the strength of the US dollar as adding to global inflation.
The Bank of Canada also joins Australia’s central bank in easing off the brakes -- with officials in both countries sharing worries about the impact of higher rates on highly indebted households. The Reserve Bank of Australia ended its streak of half-percentage-point hikes on Oct. 4, opting instead to raise the cash rate by 25 basis points to 2.6 per cent.
The central bank cut its gross domestic product forecast for 2023 by half to 0.9 per cent. It predicted economic growth will decelerate to an annualized 0.5 per cent pace in the fourth quarter of this year.
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