With inflation showing few signs of cooling, more hikes are likely to come, economists say. Find out more.
Governor Tiff Macklem and his deputies raised the policy rate by a full percentage point, bringing the interest rate up from 1.5 per cent to 2.5 per cent. It’s an aggressive move by the central bank, and the largest since 1998, but the governing council likely felt assured in their decision after the United States Federal Reserve Bank made a similarly vigorous hike of 75 basis points last month.
Inflation has hit records not seen in four decades, climbing to 7.7 per cent in May, thanks to higher prices in almost every category Statistics Canada tracks. Many economists predicted price pressures could be peaking, however the central bank’s rate increase landed just after the U.S. releasedThis advertisement has not loaded yet, but your article continues below.
“The Bank of Canada is committing to further rate hikes. Despite the fact that there are some signs that the economy is slowing and certain components of inflation are cooling, central bankers are again tying their hands with forward guidance. There’s not a lot of data between now and the September meeting. So expect further policy tightening is on a pre-set course.”“The statement noted that the decision to hike the policy rate by 100 bp 2.
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