September 25, 2022

Wire Service Canada

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Bank of Canada raises rates against inflation

Bank of Canada raises interest rates by half a percentage point; The biggest action and rising inflation expectations over the past two decades have promised further increases due to the war in Ukraine.

The central bank raised Overnight rate Note for 0.5% to 1%. He also said that government bonds accumulated during the COVID-19 epidemic would be sold to reduce them as they mature. Starting with what is known as size tightness.

Both moves were in line with analysts’ expectations. The Bank of Canada last raised rates by 50 basis points in May 2000.

“Expectations of high inflation are increasing the risk of rooting out,” the central bank said. “Interest rates should rise further.”

Exchange USD / CAD The rate was down 0.1% the day after the announcement and was around 1.2660.

“Given the difficult task of dealing with inflation … some very aggressive measures are justified,” he said. Doug PorterBMO Chief Economist of Capital Markets.

“With another 50 basis point increase (banking) in June, it seems certain that there is a definite possibility of following this increase.”

Ottawa’s central bank raised its inflation forecast to less than 6% in the first half of the year, compared to its 5% forecast in January.. It raised its forecast for 2022 from 4.2% to 5.3%, saying the Russian invasion of Ukraine would reduce the increase in raw materials, energy costs and disruptions in supply chains.

Inflation is at a 30-year high. 5.7% in February, The 11th consecutive month beyond the 1-3% limit of the Bank of Canada. Last month the bank raised rates for the first time in three years, from an unprecedented 0.25% to 0.5%.

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It also updated its growth outlook, saying the economy would grow at an annual rate of 6% in the second quarter, the first doubling, driven by consumer spending.

“Extensive measures show that the recession has been absorbed and the economy has begun to move beyond its productivity,” the April Monetary Policy Statement said.

The bank signaled that it would act “vigorously” to counter inflation and the governor. Diff McClellanThe door was open for a 50-point point hike last month.