BREAKING: Bank of Canada raises key interest rate by full percentage point to 2.5 per cent
The central bank's decision signals a more aggressive approach to bringing skyrocketing inflation back down to its target of two per cent.In its latest monetary policy report, the Bank of Canada said inflation in Canada is “largely the result of international factors,” but that “domestic demand pressures are becoming more prominent.
That excess demand is allowing businesses to pass more of their cost increases on to consumers, the bank said. The central bank is also citing concerns about rising inflation expectations among consumers and businesses. Economists generally worry when people begin expecting high inflation, as those expectations then feed into future prices set by business and wage negotiations.
In its forecast, the Bank of Canada expects GDP growth to begin to slow this year, growing by 1.75 per cent in 2023 and 2.5 per cent in 2024.
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