Bank of Canada hikes interest rate by 50 basis points
Policymakers have determined that shock and awe are necessary to battle inflation, which continues to spread despite the central bank’s efforts to adjust behaviour and expectations of where prices are headed with a series of outsized interest-rate increases over the summer. Theincreased 6.9 per cent in September from a year earlier, compared with the Bank of Canada’s target of two per cent. That means Macklem probably isn’t finished yet.
on Oct. 26. “Future rate increases will be influenced by our assessment of how tighter monetary policy is working to slow demand, how supply challenges are resolving, and how inflation and inflation expectations are responding.”Article contentThe Bank of Canada is raising interest rates this quickly for two reasons. On an abstract level, it wants to dissuade households and companies of any notion that this post-pandemic burst of inflation will persist.
The Bank of Canada acknowledges that in its rush to stomp out inflation, it could squeeze the economy too hard, triggering a recession. The central bank’s new quarterly outlook shows gross domestic product increased 1.5 per cent in the third quarter, compared with a previous estimate of two per cent, and predicts growth will slow to an annual rate of 0.5 per cent over the final three months of 2022.
“Growth is projected to essentially stall later this year and through the first half of 2023,” the Bank of Canada said in its latestPrice pressure
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Bank of Canada opts for lower half-point hike, but cautions more may comeBank of Canada hikes interest rate by 50 basis points
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