Bank of Canada surprises with 100bps hike, gold priced in CAD drops kitconews gold silver finance economics metals investing mining
The Bank of Canada caught the markets off guard by raising rates 100 basis points, taking its key interest rate to 2.5%. This is the biggest one-time hike since 1998."Inflation in Canada is higher and more persistent than the Bank expected in its April Monetary Policy Report , and will likely remain around 8% in the next few months," Canada’s central bank said Wednesday.
This is the fourth consecutive rate increase by the bank since March, which puts it ahead of its peers and demonstrates its strong commitment to getting 40-year high inflation under control. "Domestic price pressures from excess demand are becoming more prominent. More than half of the components that make up the CPI are now rising by more than 5%," the bank said."Also, surveys indicate more consumers and businesses are expecting inflation to be higher for longer, raising the risk that elevated inflation becomes entrenched in price- and wage-setting."
"Economic activity will slow as global growth moderates and tighter monetary policy works its way through the economy. This, combined with the resolution of supply disruptions, will bring demand and supply back into balance and alleviate inflationary pressures," the bank said
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