The Bank of Canada delivered another supersized hike on Wednesday, raising the policy interest rate by 75 basis points to 3.25 per cent, the highest rate since the global financial crisis.
The Bank also signalled it was continuing its quantitative tightening policy and more rate hikes would follow in an ongoing effort to stamp out decades-high inflation.
While the central bank noted inflation pressures had eased to 7.6 per cent from 8.1 per cent in July, core inflation continued to move up to a range of five to 5.5 per cent. The drop in the consumer price index was largely led by falling gasoline prices and the latest reading is still too hot for the economy to handle.
The Bank’s governing council determined that the policy rate will need to rise further since inflation is expected to remain elevated.
Not All Bad News
The central bank also pointed to stronger indicators of domestic demand as consumption grew by roughly 9.5 per cent and business investment rose nearly 12 per cent.
If you have any questions on how this rate change can affect your existing mortgage or future plans, please give me a call.