The Bank of Canada is raising its key interest rate by three-quarters of a percentage point today.
The rate hike matches up with what many economists were expecting, bringing the bank’s key rate to 3.25 per cent.
In the rate announcement, the Bank of Canada says global inflation remains high while the Canadian economy continues to operate in “excess demand.”
Canada’s year-over-year inflation rate was 7.6 per cent in July, easing from 8.1 per cent in June as gas prices fell.
However, the bank says its core measures of inflation, which tend to be less volatile, continues to move up and short-term inflation expectations remain high.
Given that outlook, the central bank says rates will need to rise further to bring inflation down to its two per cent target.
Original story follows:
The Bank of Canada is expected to announce it will be raising its key interest rate today, making it the fifth consecutive increase this year.
Some Canadian banks are expecting the Bank of Canada to increase its key rate by three-quarters of a percentage point, bringing it to 3.25 per cent.
The rate hikes will feed into other lending rates, making it more expensive for Canadians and businesses to borrow money.
The Bank of Canada, along with central banks around the world, has been raising interest rates in an effort to cool sky-high inflation.
Canada’s year-over-year inflation rate was 7.6 per cent in July, well above the central bank’s two per cent target.
As well as hot inflation, the rate decision comes as the Canadian economy remains in relatively good shape and the unemployment rate is at historic lows. However, economists widely expect an economic slowdown is on the horizon.
This report by The Canadian Press was first published Sept. 7, 2022.