Bank of Canada hikes interest rate amid soaring inflation
Posted June 1, 2022 3:00 am.
Last Updated June 1, 2022 9:41 am.
The Bank of Canada hiked its key interest rate by another half-percentage point to 1.5 per cent Wednesday as it tries to put the brakes on out-of-control inflation.
The bank is also continuing its policy of quantitative tightening.
According to Statistics Canada, the annual pace of inflation rose to 6.8 per cent in April, the fastest year-over-year rise in more than three decades and well above the central bank’s forecast.
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The soaring cost of consumer goods from gasoline to groceries has experts speculating that further interest rate hikes are on the horizon this year.
“The risk of elevated inflation becoming entrenched has risen. The Bank will use its monetary policy tools to return inflation to target and keep inflation expectations well anchored,” the bank said Wednesday.
Seeing a big spike in Canada 2, 5 and 10 year bond yields following the Bank of Canada 50 bps rate hike…warning it could raise rates "more forcefully" if needed. Concerned about inflation becoming "entrenched"
-Canada 5 year yield up 12bps at 2.85%…highest since 2010
— Mike Eppel (@eppman) June 1, 2022
The central bank raised its key interest rate half a percentage point in April to one per cent — the biggest hike in 22 years, and one that followed a quarter-percentage-point bump in March, the first hike since 2018.
The Bank of Canada makes changes to its trendsetting interest rate in an effort to control inflation with a target of two per cent.
The next scheduled date for announcing the overnight rate target is July 13, 2022.
