The central bank is on a campaign to cool an overheated economy and rein in soaring inflation. Read more here.
Governor Tiff Macklem is expected to raise the central bank’s policy rate by three quarters of a percentage point on Wednesday, to 2.25 per cent — the largest increase since 1998. That follows back-to-back half-percentage-point hikes in April and June, making the current tightening effort one of the most aggressive ever.
Policymakers will also outline new forecasts for growth and inflation at the decision, due at 10 a.m. in Ottawa, and will likely signal more tightening is needed in coming months. Macklem speaks to reporters an hour later. Data continue to point to an economy struggling with capacity limits and in need of cooling, despite being already four months into the hiking cycle.
Bank of Canada officials hope they can orchestrate a soft landing, where higher borrowing costs ease price pressures without producing a major economic contraction.The consensus is that growth will slow over the next year, but remain resilient as Canada’s economic expansion benefits from strong momentum coming out of the pandemic.“The BoC will step up its fight against inflation this week, likely with a 75-bp hike at Wednesday’s meeting.
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