The Bank of Canada aims to fight inflation by raising its key overnight rate 50 basis points to 1.5 per cent
The central bank has selected a steep path to higher interest rates. Policymakers have now raised borrowing costs at three consecutive meetings, and at the last two they opted for unusually large half-point increases, the first time that’s happened since the Bank of Canada started scheduling interest-rate announcements in 2000.
The consumer price index “will likely move even higher in the near term before beginning to ease,” the statement said. That easing will require higher interest rates to choke demand. “Inflation continues to broaden,” central banker observed, citing their “core” measures of price pressures, all of which are above three per cent.
Still, policymakers were caught off guard by how quickly the economy recovered from the COVID recession. The jobless rate is now at a modern low, and Statistics Canada reported May 31 that the economy pushed through the latest wave of COVID-19 and“Canadian economic activity is strong and the economy is clearly operating in excess demand,” the Bank of Canada said.
But as housing prices tumble, wage growth “has been picking up and broadening across sectors.” That will help households keep up with higher prices, but it also suggests that policymakers might be losing its grip on inflation expectations: if you trust the central bank to keep prices under control, you might not ask for a big raise. Expectations notwithstanding, higher wages are indicative of a market that is starved for supply.
Canada Latest News, Canada Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Bank of Canada raises rate half a point to 1.5%, signals more hikes to comeBank of Canada hikes rate by another 50 basis points to 1.5% — via financialpost Economy Canada ratehike
Read more »
Bank of Canada raises rate half a point to 1.5%, signals more hikes to comeThe Bank of Canada aims to fight inflation by raising its key overnight rate 50 basis points to 1.5 per cent
Read more »
Bank of Canada expected to jack up interest rates as inflation persists
Read more »
Posthaste: Bank of Canada super-sized hike all but certain — what that means for your mortgageBorrowers who will feel the pinch first are those who took out a variable rate\u002Dmortgage and tapped into home equity with a HELOC
Read more »
Posthaste: Bank of Canada super-sized hike all but certain — what that means for your mortgageBorrowers who will feel the pinch first are those who took out a variable rate\u002Dmortgage and tapped into home equity with a HELOC
Read more »