The Bank of Canada’s overnight rate is now 3.75%, a .5% increase, leaving the door open for, at a minimum, a .25% increase on Dec. 7..“In Canada, the economy continues to operate in excess demand and labour markets remain tight. The demand for goods and services is still running ahead of the economy’s ability to supply them, putting upward pressure on domestic inflation,” said the bank in a press release..“Businesses continue to report widespread labour shortages and, with the full reopening of the economy, strong demand has led to a sharp rise in the price of services.”.It’s the fifth consecutive rate increase since April, when the rate stood at .25% as a defense again potential economic impacts of the pandemic..The effects of the rate increases have become very evident, putting the brakes on dangerously red-hot housing markets, a reduction in household and business spending .“Also, the slowdown in international demand is beginning to weigh on exports,” says the bank. “Economic growth is expected to stall through the end of this year and the first half of next year as the effects of higher interest rates spread through the economy.” .“The bank projects GDP growth will slow from 3.75% this year to just under 1% next year and 2% in 2024.”.The increases are designed to reduce inflation rates, which are rampant all over the globe, says the bank..“Inflation around the world remains high and broadly based. This reflects the strength of the global recovery from the pandemic, a series of global supply disruptions, and elevated commodity prices, particularly for energy, which have been pushed up by Russia’s attack on Ukraine.".“The strength of the US dollar is adding to inflationary pressures in many countries. Tighter monetary policies aimed at controlling inflation are weighing on economic activity around the world. As economies slow and supply disruptions ease, global inflation is expected to come down.”.The consumer price index (CPI) inflation rate declined from 8.1% to 6.9% in the last three months, primarily due to a fall in gasoline prices. .“However, price pressures remain broadly based, with two-thirds of CPI components increasing more than 5% over the past year,” says the bank..“Our preferred measures of core inflation are not yet showing meaningful evidence that underlying price pressures are easing. Near-term inflation expectations remain high, increasing the risk that elevated inflation becomes entrenched.”.It’s going to be a long haul to get the rate to where the bank wants it.."CPI inflation is projected to move down to about 3% by the end of 2023, and then return to the 2% target by the end of 2024,” says the bank, adding increases are not over..“Given elevated inflation and inflation expectations, as well as ongoing demand pressures in the economy, the Governing Council expects the policy interest rate will need to rise further,” says the bank. "Future rate increases will be influenced by our assessments of how tighter monetary policy is working to slow demand, how supply challenges are resolving, and how inflation and inflation expectations are responding.” .“Quantitative tightening is complementing increases in the policy rate.” .“We are resolute in our commitment to restore price stability for Canadians and will continue to take action as required to achieve the 2% inflation target.
The Bank of Canada’s overnight rate is now 3.75%, a .5% increase, leaving the door open for, at a minimum, a .25% increase on Dec. 7..“In Canada, the economy continues to operate in excess demand and labour markets remain tight. The demand for goods and services is still running ahead of the economy’s ability to supply them, putting upward pressure on domestic inflation,” said the bank in a press release..“Businesses continue to report widespread labour shortages and, with the full reopening of the economy, strong demand has led to a sharp rise in the price of services.”.It’s the fifth consecutive rate increase since April, when the rate stood at .25% as a defense again potential economic impacts of the pandemic..The effects of the rate increases have become very evident, putting the brakes on dangerously red-hot housing markets, a reduction in household and business spending .“Also, the slowdown in international demand is beginning to weigh on exports,” says the bank. “Economic growth is expected to stall through the end of this year and the first half of next year as the effects of higher interest rates spread through the economy.” .“The bank projects GDP growth will slow from 3.75% this year to just under 1% next year and 2% in 2024.”.The increases are designed to reduce inflation rates, which are rampant all over the globe, says the bank..“Inflation around the world remains high and broadly based. This reflects the strength of the global recovery from the pandemic, a series of global supply disruptions, and elevated commodity prices, particularly for energy, which have been pushed up by Russia’s attack on Ukraine.".“The strength of the US dollar is adding to inflationary pressures in many countries. Tighter monetary policies aimed at controlling inflation are weighing on economic activity around the world. As economies slow and supply disruptions ease, global inflation is expected to come down.”.The consumer price index (CPI) inflation rate declined from 8.1% to 6.9% in the last three months, primarily due to a fall in gasoline prices. .“However, price pressures remain broadly based, with two-thirds of CPI components increasing more than 5% over the past year,” says the bank..“Our preferred measures of core inflation are not yet showing meaningful evidence that underlying price pressures are easing. Near-term inflation expectations remain high, increasing the risk that elevated inflation becomes entrenched.”.It’s going to be a long haul to get the rate to where the bank wants it.."CPI inflation is projected to move down to about 3% by the end of 2023, and then return to the 2% target by the end of 2024,” says the bank, adding increases are not over..“Given elevated inflation and inflation expectations, as well as ongoing demand pressures in the economy, the Governing Council expects the policy interest rate will need to rise further,” says the bank. "Future rate increases will be influenced by our assessments of how tighter monetary policy is working to slow demand, how supply challenges are resolving, and how inflation and inflation expectations are responding.” .“Quantitative tightening is complementing increases in the policy rate.” .“We are resolute in our commitment to restore price stability for Canadians and will continue to take action as required to achieve the 2% inflation target.
