What likely is not a surprise to markets anymore, the Bank of Canada raised borrowing costs by 75 basis points, bringing the overnight rate into a restrictive territory of 3.25%.
Marking the fifth consecutive interest rate increase, the Bank of Canada’s policy rate is now the highest among developed economies, as Governor Tiff Macklem vows to fight the highest inflation in over 40 years. Despite July’s inflation reading tapering off to 7.6% largely thanks to a drop in gasoline prices, policy makers cautioned it is no time for the central bank to let its guard down, promising more rate hikes in the upcoming months, even as the economy slows and global demand weakens.
“Given the outlook for inflation, the Governing Council still judges that the policy interest rate will need to rise further,” read a statement from the bank. Policy makers cited a number of events currently keeping price pressures elevated, including the conflict in Ukraine, supply chain disruptions, and lingering effects of the Covid-19 pandemic. Domestically, core inflation continues to move higher, while short-term inflation expectations remain high, furthering the risk of price pressures becoming entrenched even more.
Sponsored · Altamira Gold Corp.
Following a bonanza of money printing, central banks of OECD countries are slamming the breaks on ultra-accommodative monetary policies that sent inflation soaring. The US Federal Reserve promised to bring inflation in line with the 2% target rate even at the expense of dampened economic growth and higher unemployment, while the European Central Bank is slated to deliver a 75 basis point hike later this week.
Information for this briefing was found via the BOC. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
