The Bank of Canada once more raised its key rate by a quarter of a percentage point on Wednesday, taking it from 4.25% to 4.50%. However, it predicts a considerable drop in inflation this year.
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This is the eighth consecutive increase in the key rate in the month of a year.
According to the Bank of Canada, however, inflation is declining in many countries, “largely reflecting lower energy prices as well as improvements in global supply chains,” it said. it was specified in a press release.
The Bank estimates that growth in the global economy averaged 3.5% in 2022, and will decline to around 2% in 2023 and 2.5% in 2024. This is a projection “slightly higher than that of October”.
“Inflation is expected to come down significantly this year. The Bank expects lower energy prices, improving global supply conditions and the effects of higher interest rates on demand to lead to lower measured inflation by the consumer price index, which is expected to hover around 3% at mid-year and return to the 2% target in 2024.”
The Governing Council of the Bank of Canada, however, says it is ready to raise the key rate further “if necessary to bring inflation back to the 2% target”.
