OTTAWA — The Bank of Canada announced a quarter-percentage point rate hike Wednesday, the first interest rate increase since January, as high inflation persists.“Based on the accumulation of evidence, governing council decided to increase the policy interest rate, reflecting our view that monetary policy was not sufficiently restrictive to bring supply and demand into balance and return inflation sustainably to the two per cent target,” the Bank of Canada said in a news release.
Inflation also came in hotter than expected in April, the central bank said, noting prices for a “broad range” of good and services rose might than anticipated. Looking ahead, the central bank says it will continue to monitor the economy and evolution of inflation, dropping any language it was pausing rate hikes, which has appeared in the text of rate announcements since January.
Since then, incoming economic data has continued to surprise forecasters who had anticipated the economy to stall by now. Despite elevated interest rates making borrowing more expensive for consumers and businesses, businesses are still hiring, and consumers continue to spend.
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