The Bank of Canada hiked its key interest rate by half a percentage point Wednesday to 4.25 per cent SA国际影视传媒� the highest itSA国际影视传媒檚 been since January 2008 SA国际影视传媒� while signalling it may pause its aggressive rate hike cycle.
Since March, the central bank has raised its key interest rate seven consecutive times in an effort to bring inflation down and slow the economy.
SA国际影视传媒淟ooking ahead, the governing council will be considering whether the policy interest rate needs to rise further to bring supply and demand into balance and return inflation to target,SA国际影视传媒� the Bank of Canada said in a news release.
That language is a marked departure from previous announcements where the bank said more rate hikes should be expected.
In note to clients, CIBC chief economist Avery Shenfeld said SA国际影视传媒渢he Bank of Canada flashed a yellow card on its rate hiking team.SA国际影视传媒�
In its news release, the Bank of Canada said thereSA国际影视传媒檚 SA国际影视传媒済rowing evidenceSA国际影视传媒� that higher interest rates are restraining demand in the economy.
SA国际影视传媒淐onsumption moderated in the third quarter, and housing market activity continues to decline,SA国际影视传媒� the central bank said.
The Bank of Canada said economic data released since its October interest rate decision supports its forecast that growth will stall through the end of the year and into the first half of 2023.
At the same time, it said inflation is still too high and short-term inflation expectations remain elevated.
In October, the annual inflation rate was 6.9 per cent, well above the Bank of CanadaSA国际影视传媒檚 two per cent target. However, economists have noted the three-month annualized inflation rate has dropped to below four per cent, suggesting inflation is headed in the right direction.
Forecasters were split on whether the Bank of Canada would opt for a quarter or half percentage point rate hike ahead of WednesdaySA国际影视传媒檚 decision. Market watchers were also unsure if the central bank would continue raising interest rates in the new year.
CIBC expects the Bank of Canada to pause its rate hikes, but to keep its key rate elevated at 4.25 per cent until 2024.
SA国际影视传媒淲hile the tightening cycle likely has reached its zenith, weSA国际影视传媒檒l need the pain of these higher rates to persist for a while to stall economic growth and thereby cool inflation,SA国际影视传媒� said Shenfeld.
The Bank of Canada will announce its next interest rate decision on Jan. 25.
SA国际影视传媒擝y Nojoud Al Mallees, The Canadian Press
