AA / Montreal / Hatem Kattou
The Bank of Canada announced on Wednesday that it would raise its key interest rate by one point to 2.50%, the largest increase since 1998.
This is what emerges from a press release posted on Wednesday by the Bank of Canada on its electronic site.
This increase is in line with the same logic adopted by the Canadian Federal Bank for several months, as a tool used to try to curb the inflationary spiral.
The inflation rate stood at 7.7% last May, a peak for almost 40 years.
The Bank said, “Inflation in Canada is higher and more persistent than the Bank projected in its April Monetary Policy Report, and is likely to remain around 8% over the coming months.”
While pointing to “global factors such as the war in Ukraine and continued supply disruptions as key drivers of inflation”, the Bank admitted that “domestic price pressures from excess demand are in significance”.
As a consequence of this increase, the Bank notes that this “increase in the key rate is accompanied by repercussions on individuals and businesses who pay more interest on their mortgages and other loans, which has the effect of discouraging borrowing, cut spending and curb inflation.
Remember that at the beginning of this year, the Bank’s key rate was 0.25%, a level maintained for almost two years, which generally corresponds to the period of the pandemic.
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