Bank of Canada to hike interest rates again in Bid to tame inflation
The Bank of Canada is widely expected to hike its benchmark interest rate by a quarter percentage point on Wednesday, bringing it to 5%. This would be the central bank’s third consecutive rate hike and its highest policy rate since 2007.
The decision to raise rates comes as inflation in Canada remains stubbornly high. The consumer price index rose 7.7% in May year-over-year, the highest level in nearly 40 years. The Bank of Canada has said it is committed to bringing inflation back to its 2% target, and it believes that raising rates will help to do that.
However, there are concerns that the central bank’s aggressive rate hikes could lead to a recession. The economy is already showing signs of slowing, and some economists believe that a rate hike of 5% would be too much, too soon.
The Bank of Canada will release its latest economic projections along with the interest rate decision on Wednesday. These projections will provide more clarity on the central bank’s thinking about the economy and the path of interest rates.
In addition to raising rates, the Bank of Canada is also taking other steps to try to cool inflation. These include selling government bonds in the open market, which helps to push up interest rates on longer-term loans.
The Bank of Canada is facing a difficult challenge in trying to balance the need to bring down inflation with the risk of a recession. It will be interesting to see how the central bank navigates this challenge in the coming months.
- The article provides more detail about the economic conditions that are leading the Bank of Canada to raise interest rates.
- The article discusses the potential risks of a recession and the steps that the Bank of Canada is taking to try to prevent one.
- The article provides more context about the Bank of Canada’s decision-making process, and the factors that it will consider when making its next interest rate decision.