Economists are predicting the Bank of Canada will hike its key interest rate by three-quarters of a percentage point on Wednesday as inflation rages on globally.
The Bank of Canada has identified both domestic and international factors leading to soaring inflation. Domestically, the bank says there's excess demand in the economy, while globally, supply chain problems and the war in Ukraine continue to put upward pressure on prices.
Laval University economics professor Stephen Gordon said the primary reasoning behind a larger rate hike would be to rein inflation expectations. However, a recent report from the Canadian Centre for Policy Alternatives warned rapidly increasing interest rates will likely send the Canadian economy into a recession and could cause significant "collateral damage," including 850,000 job losses.
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