Bank of Canada raises interest rates to 4.5% and plans to hold - BNN Bloomberg

Policymakers led by Governor Tiff Macklem increased the benchmark overnight lending rate by 25 basis points to 4.5 per cent on Wednesday, the highest level in nearly 15 years.

Inflation is now forecast to fall back into the central bank’s 1 per cent to 3 per cent target by midyear and return to the 2 per cent target in 2024. Officials flagged falling 3-month measures as a signal that core inflation has peaked. Still, policymakers cautioned more hikes may be needed if economic data surprise to the upside. The bank “is prepared to increase the policy rate further if needed to return inflation to the 2 per cent target.”

Importantly, policymakers flagged slowing 3-month measures of core inflation as evidence underlying price pressures have peaked. Global supply chain conditions and lower energy prices are also reasons the central bank sees inflation coming down “significantly” this year. For Canada, assessing the balance of risks between over and under-tightening monetary policy is complicated by a mixed data picture. While headline inflation has fallen to 6.3 per cent from a peak of 8.1 per cent in June, expectations remain elevated. A tight labor market continued to add jobs at the end of last year, and there’s little evidence yet of any rapid gearing down of economic growth that could allow supply to catch up with demand.

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Bank of Canada raises interest rates to 4.5% and plans to hold - BNN BloombergThe Bank of Canada is raising its key interest rate by a quarter of a percentage point and says it expects this to be the last rate hike of the cycle. Despite of their efforts inflation will go down marginally, they have to face lot because of their karma of keeping low rate for long time and they will never get 2%-3% at least for 3 years and most of financial institutions giving gic rates 4.85% for 4 years so rate won’t go low BoC typically overstating the impact that rate decisions have on inflation control.
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Economists expect one final rate hike by Bank of Canada before holding - BNN BloombergEconomists predict the Bank of Canada will raise interest rates for an eighth consecutive time with a final “insurance” hike on Wednesday before easing off its aggressive tightening policy cycle.
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