BREAKING: Bank of Canada hikes key interest rate by 50 basis points Wednesday as inflation rages
The war in Ukraine has driven wheat prices up because a large portion of the world’s wheat is grown in that region.
The conflict is also a key driver of gas prices, which in turn affect many other products, in part due to the cost of transportation. The bank’s announcement Wednesday cited the war, lockdowns in China, and ongoing supply disruptions as the primary factors boosting inflation. Meanwhile, Canada’s GDP slowed in the first quarter of 2022, growing at a 3.1 per cent annualized rate for the first quarter, down from 6.6 per cent in the fourth quarter of 2021.“Job vacancies are elevated, companies are reporting widespread labour shortages, and wage growth has been picking up and broadening across sectors. Housing market activity is moderating from exceptionally high levels.
In the announcement Wednesday, the bank wrote that the risk of elevated inflation becoming entrenched has risen, and that the policy interest rate remains the bank’s strongest tool in the effort to achieve its two per cent inflation target.
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