The Bank of Canada announced on Wednesday that it will raise interest rates by 0.5 percentage points to 1%, the lowest level in 22 years, in a bid to reduce high inflation.
The last time the central bank announced a half-point interest rate hike was in May 2000. Normally the country would increase by 0.25 points.
The company justified the rise in inflation to 5.7% in Canada, especially due to rising energy and food prices.
Canadian officials predict that average inflation will be 6% in the first half of 2022, and that it will be “much higher” than the Bank of Canada’s target for the rest of the year, ranging from 1% to 3%.
According to the same forecast, inflation will fall to 2.5% in the second half of 2023 and 2% in 2024.
The central bank also said in a statement that it would stop converting government securities at maturity from the massive program launched during the Govt-19 epidemic.
The company noted that the Canadian economy is growing strongly and is moving towards a level of overcrowding. Forecasts are that the economy will grow by 4.25% this year, 3.25% in 2023 and 2.25% in 2024.
In March, Canada’s unemployment rate fell to 5.3%, its lowest level since 1976.
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