Economists had widely expected the Bank of Canada would hike its key rate by 75 basis points
Coming off two back-to-back hikes of 50 basis points earlier this year, the Bank of Canada has unexpectedly followed up with one of its highest rate-hikes ever.
. Instead, the central bank blew right on past that amid soaring inflation after its counterpart in the U.S., the Federal Reserve, hiked its own overnight rate 75 basis points last month.The Bank of Canada said inflation is higher and more persistent than it expected when it released an April policy report. It now expects inflation to remain around 8 per cent over “the next few months.”
“With the economy clearly in excess demand, inflation high and broadening, and more businesses and consumers expecting high inflation to persist for longer, the Governing Council decided to front-load the path to higher interest rates by raising the policy rate by 100 basis points today.” “While a still growing economy and robust population growth point to strong demand, it is increasingly difficult to satisfy that demand at current interest rates,” BCREA chief economist Brendon Ogmundson said in a July 12 statement.
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