The Bank of Canada released a summary of its Governing Council meetings on Wednesday, providing the public and financial institutions with more insight into the central bank’s decision to raise its key interest rate on Jan. 25.
on Wednesday, providing the public and financial institutions with more insight into the central bank’s decision to raise its key interest rate on Jan. 25.
Ultimately, the council’s consensus to raise the rate was due to a tight labour market and concern over stronger-than-expected economic growth in the third and fourth quarters of 2022. Despite this, there was also consensus to indicate a pause in the bank's hikes to measure the full effect of its forceful tightening.
“Council concluded that wage momentum was plateauing in the range of 4 per cent to 5 per cent,” reads the summary. “Persistent wage growth in this range was not viewed as consistent with achieving the 2 per cent target.” Discussions around the international economy were focused mainly on the United States reaching its debt ceiling, and how negotiations in U.S. Congress around raising it could become “protracted and pose risks of financial volatility if an agreement were elusive.”
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