Bank of Canada Announces Surprise 1% Rate Hike, Largest Increase in 24 Years

The Canadian cost of borrowing just rose by the largest margin since the late ’90s, as the Bank of Canada bumped up its trend-setting Overnight Lending Rate. It’s the heftiest one-time increase since August 1998 — and the central lender is signalling that there’s more to come before it’s through.

, and will likely remain around 8% in the next few months,” states the Bank of Canada in its release. “While global factors such as the war in Ukraine and ongoing supply disruptions have been the biggest drivers, domestic price pressures from excess demand are becoming more prominent.” It adds that more than half of the components in the basket of goods that make up the CPI are increasing by more than 5%, pushing its core measures of inflation to between 3.9 – 5.4%. The BoC also references its recent quarterly consumer and business surveys, which indicated that respondents expect inflation to be higher for longer, increasing the risk it will become entrenched in price- and wage-setting.

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