AA / Montreal / Hatem Kattou
The Bank of Canada announced on Wednesday an increase, the sixth since the start of 2022, of its key rate by 0.5%, to set it at 3.75%.
This is apparent from a press release posted Wednesday morning on the Federal Bank’s website.
This umpteenth increase in the key rate is part of the relentless undertaking by the Bank of Canada, for several months, to try to counter the inflationary spiral, the pet peeve of the governor of the Canadian federal institution.
Currently at 6.9%, the consumer price index has fallen slightly in recent months but the aim remains, according to Bank Governor Tiff Macklem, to bring this rate down to 3% by the end next year.
The Bank of Canada also pointed out that inflation across the world remains “high and generalized.”
The federal institution added that “the strength of the global recovery from the pandemic, global supply disruptions and high commodity prices – in particular energy – explain this increase”.
And the Federal Bank continued: “The monetary tightening measures taken to control inflation are also weighing on economic activity throughout the world”.
“Inflation is expected to decline as economies slow and supply disruptions ease,” the statement said.
The Bank of Canada has, on another note, forecast a “slowdown in GDP growth, which should drop to almost 1% next year, and to 2% in 2024”.
“In Canada, the economy remains in a situation of excess demand and the labor markets also remain tight,” maintains the Bank.
Regarding the key rate, many Canadian economists and experts predict that the Bank of Canada will make a seventh hike in 2022 to establish its rate by the end of the current year at 4.25%.
At the beginning of the year, the key rate was 0.25%.
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