The Bank of Canada raised interest rates by 0.50% to 1%, the highest rate hike in more than two years, hinting at further rate hikes in the coming days. Rising inflation is also becoming more serious in Canada.
“Raising interest rates in the coming days is a necessary task. We are committed to implementing a strict financial control policy. This includes raising interest rates to control inflation This is because inflation is currently skyrocketing and is likely to undermine economic growth,”
Bank of Canada Governor said.
The Bank of Canada raised its inflation forecast for the first half of 2022 to 6% from an initial 5% and increased its inflation forecast for 2022 to 5.3% from 4.2%. It said the Russia-Ukraine war has led to higher global commodity prices and oil prices. There has also been stagnation in the supply chain. These situations have caused inflation to skyrocket.
Earlier, in February, inflation in Canada climbed to 5.7%, above the Bank of Canada’s inflation target of 1% to 3% for the eleventh consecutive month, prompting the Reserve Bank of Canada to raise its key interest rate to 0.50% from 0.25% at the last March meeting.