𝐁𝐚𝐧𝐤 𝐨𝐟 𝐂𝐚𝐧𝐚𝐝𝐚 𝐫𝐚𝐢𝐬𝐞𝐬 𝐤𝐞𝐲 𝐫𝐚𝐭𝐞 𝐭𝐨 𝟏 𝐩𝐞𝐫 𝐜𝐞𝐧𝐭 𝐚𝐧𝐝 𝐰𝐚𝐫𝐧𝐬 𝐟𝐮𝐫𝐭𝐡𝐞𝐫 𝐡𝐢𝐤𝐞𝐬 𝐬𝐭𝐢𝐥𝐥 𝐭𝐨 𝐜𝐨𝐦𝐞April 13, 2022
The Bank of Canada has raised its key interest rate by the highest amount in more than 20 years and warns more rate hikes are coming amid new forecasts for higher inflation levels.
Governor Tiff Macklem said inflation is too high and is expected to stay elevated for longer than the bank previously thought.
The central bank hiked its policy interest rate by half a percentage point on Wednesday to one per cent.
The last time the central bank raised its key interest rate by half a percentage point was May 2000.
The Bank of Canada also said it would start reversing other pandemic-era stimulus measures. The central bank will begin “quantitative tightening” starting April 25, when the government bonds it holds will no longer be replaced when they mature. At the start of the pandemic the Bank of Canada bought billions in government bonds, in a move designed to keep money flowing when the economy shuddered to a halt.
The central bank’s next interest rate announcement is set for June 1, while its next monetary policy report, which will include its updated outlook for the economy and inflation, is scheduled to be released along with the bank’s July 13 interest rate decision.