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Bank of Canada hikes by 50bp and is prepared to hit the accelerator
The Bank of Canada has raised its policy rate by 50bp to 1.5%, as widely expected. The accompanying statement shows the central bank is laser focused on inflation, commenting that almost 70% of the CPI basket is running in excess of 3% and rising, meaning that "the risk of elevated inflation becoming entrenched has risen." At the same time, Canada's economy is "strong" and is "clearly operating in excess demand". Consequently "interest rates will need to rise further" with the BoC “prepared to act more forcefully if needed”. A strong economy, booming jobs market, and elevated inflation argue for another ... (full story)