The announcement was expected, even feared. It is now official. The Bank of Canada is increasing its key rate by 0.25 percentage points, bringing it to 5%. This is the tenth increase in the key rate since March 2022, when it was still at its pandemic low of 0.25%.
“The Canadian economy was stronger than expected, with demand showing stronger momentum” than the Bank of Canada expected, it said in a statement. She notes in this regard that “consumption growth was surprisingly high, reaching 5.8% in the first quarter. »
The central bank justifies this new tightening by the fact that the underlying inflationary pressures remain strong. In particular, it points out that it will take longer than expected before inflation returns to its target of 2.0%. It now expects annual inflation to hover around 3.0% for the next year, then gradually decline to 2% by mid-2025.
The central bank did not indicate whether or not it intended to raise the key rate again when it made its next announcement on September 6.
More details will follow.
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