The Bank of Canada raises its key rate by 100 basis points to 2.5%.
Posted at 10:00 a.m.
Updated at 10:11 a.m.
This is a higher increase than that anticipated by economists who were instead expecting a 75 basis point increase in the key rate.
Inflation in Canada is higher and more persistent than the Bank projected in its Monetary Policy Report April, and will probably remain around 8% over the next few months, the Bank of Canada said on Wednesday to explain its decision.
“While global factors such as the war in Ukraine and continued supply disruptions have been the main drivers of inflation, domestic price pressures from excess demand are gaining in importance. »
Inflation reached 7.7% in May in Canada, a level well above the 2% target usually targeted by central banks.
More than half of the components of the consumer price index are now posting an increase of more than 5%.
“Survey results indicate that more consumers and businesses expect inflation to be higher for longer, heightening the risk of high inflation entrenching pricing and wages. If this happens, the economic cost to restore price stability will be greater,” the Bank of Canada said in its statement.
The Bank of Canada had already raised its key rate by half a percentage point on 1er June, which had taken it to 1.5% and its leaders had hinted that they could be more aggressive.