Bank of Canada Pauses Rate Hikes

As was forecasted by economists, Bank of Canada Governor Tiff Macklem decided to keep the overnight borrowing rate unchanged at 5%, following data suggesting high interest costs are finally making their way through the economy and delivering stagnant GDP figures.

Macklem pointed to signs of an alarming second quarter slowdown in China’s economic growth, with inflation across advanced economies showing signs of easing. Likewise, Canada’s economy, too, has abruptly decelerated, thanks to slowing consumption growth and housing activity, as well as negative impacts stemming from this season’s rampant wildfires.

Still, policy makers pointed to broad-based inflationary pressures that are persist throughout the economy, namely a recent increase in gasoline prices. “Year-over-year and three-month measures of core inflation are now both running at about 3.5%, indicating there has been little recent downward momentum in underlying inflation,” reads the bank’s statement. “The longer high inflation persists, the greater the risk that elevated inflation becomes entrenched, making it more difficult to restore price stability.”

But, despite September’s pause on raising interest rates, the bank continues to raise alarm over underlying inflation, and is thus prepared to hike borrowing costs again depending on incoming economic data. “We will be evaluating whether the evolution of excess demand, inflation expectations, wage growth and corporate pricing behavior are consistent with achieving the 2% inflation target,” policy makers added.


Information for this story was found via the Bank of Canada. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses

Video Articles

New Found Gold: The Strategic Maritime Resources Purchase

Amex Exploration: Revised Perron PEA Has INSANE Economics

Aris Mining: The Multi Billion Dollar Soto Norte PFS

Recommended

Canadian Copper Secures $8 Million Lead Order From Ocean Partners As Part Of Larger Funding Round

Northern Superior Expands Philibert With 350 Metre Step Out Testing 1.10 g/t Gold Over 25.5 Metres

Related News

US CPI Cools Slightly in October, Real Wages Continue to Tumble

US consumer prices remained elevated in October, albeit at a moderate pace after a drop...

Thursday, November 10, 2022, 09:29:43 AM

Inflation Fears Among Canadian Businesses, Consumers on the Rise

Both businesses and consumers across Canada are feeling the pressure of rising inflation and supply...

Tuesday, April 5, 2022, 05:03:00 PM

ECB Unexpectedly Delivers 50 Basis-Point Rate Hike as Inflation Runs Amok

The European Central Bank yesterday delivered an unexpected rate hike of 50 basis points, marking...

Friday, July 22, 2022, 03:32:00 PM

The Economic Impacts Of Biden’s Proposed $15 Minimum Wage Hike

America’s minimum wage, which has been stagnant since 2009 at a paltry $7.25 per hour,...

Tuesday, February 9, 2021, 10:27:00 AM

US Mortgage Rates Soar to 9-Month High

Marking the sixth straight week of increases, US mortgage rates jumped to their highest level...

Friday, March 26, 2021, 02:43:00 PM