Bank of Canada Hikes Rates to 5 Percent Amid Record Inflation
Central Bank Continues Aggressive Quantitative Tightening
Policy Interest Rate Now at Highest Level Since 2008
In a move to curb soaring inflation, the Bank of Canada (BoC) has raised its key policy interest rate by 50 basis points to 5 percent, marking the highest level since 2008.
This latest increase follows a series of rate hikes implemented by the central bank throughout the year, as it grapples with the persistent surge in consumer prices. Inflation in Canada has reached a 39-year high of 7.7 percent year-over-year, fueled by rising energy and food costs, as well as supply chain disruptions.
In addition to raising interest rates, the BoC is also continuing its quantitative tightening program, which involves reducing its holdings of government bonds. This measure further tightens monetary conditions and contributes to the broader effort to combat inflation.
Governor Tiff Macklem has signaled that further interest rate hikes are likely in the coming months, as the central bank aims to bring inflation back to its target of 2 percent. However, the BoC has also expressed concern about the impact of aggressive monetary tightening on economic growth and has indicated that it will continue to monitor the situation closely.
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