The Bank of Canada is set to announce Wednesday morning whether it’s raising its key overnight interest rate again, and most analysts are expecting another quarter percentage point hike.The 10 a.m. announcement will be accompanied by the Bank’s latest Monetary Policy Report, a quarterly look at the state of the Canadian economy.Most analysts are expecting the Bank to raise the overnight rate by 25 basis points (a quarter of a percentage point) to five per cent. Trading on the overnight interest swap market has priced in a 75 per cent chance of a hike Wednesday.At its last rate decision in June, the Bank surprised observers by raising the overnight rate to 4.75 from 4.5 per cent. That was the first hike since a “conditional pause” was announced by the Bank in January.Last March, the Bank of Canada began an aggressive rate-hike campaign in a bid to drive down inflation, which soared as high as 8.1 per cent. In several steps, the Bank pushed its key overnight rate to 4.75 per cent from 0.25 per cent. The theory is that by making it more expensive to borrow money, consumers — and businesses — will spend less, driving prices down and slowing the economy.In May, the annual rate of inflation fell to 3.4 per cent, the lowest it’s been in almost two years. While that’s substantially lower than the 8.1 per cent inflation peaked at in June 2022, it’s still well above the Bank’s two per cent target. Bank governor Tiff Macklem has warned that getting it the rest of the way down to two per cent will be harder.
The Bank of Canada is set to announce Wednesday morning whether it’s raising its key overnight interest rate again, and most analysts are expecting another quarter percentage point hike.
The 10 a.m. announcement will be accompanied by the Bank’s latest Monetary Policy Report, a quarterly look at the state of the Canadian economy.
Most analysts are expecting the Bank to raise the overnight rate by 25 basis points (a quarter of a percentage point) to five per cent. Trading on the overnight interest swap market has priced in a 75 per cent chance of a hike Wednesday.
At its last rate decision in June, the Bank surprised observers by raising the overnight rate to 4.75 from 4.5 per cent. That was the first hike since a “conditional pause” was announced by the Bank in January.
Last March, the Bank of Canada began an aggressive rate-hike campaign in a bid to drive down inflation, which soared as high as 8.1 per cent. In several steps, the Bank pushed its key overnight rate to 4.75 per cent from 0.25 per cent.
The theory is that by making it more expensive to borrow money, consumers — and businesses — will spend less, driving prices down and slowing the economy.
In May, the annual rate of inflation fell to 3.4 per cent, the lowest it’s been in almost two years. While that’s substantially lower than the 8.1 per cent inflation peaked at in June 2022, it’s still well above the Bank’s two per cent target. Bank governor Tiff Macklem has warned that getting it the rest of the way down to two per cent will be harder.
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