The Bank of Canada on Wednesday announced interest rates ranging from half-points to 1%, the highest level recorded 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. Generally, interest rate hikes in the country are at a quarter point.
The firm justified the rise in interest rates by a sharp rise in inflation to 5.7% in Canada, particularly 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 bonds at maturity from the massive program launched during the Govt-19 epidemic.
The company noted that the Canadian economy is growing strongly and is heading towards a level of overcrowding. Forecasts The economy is expected to 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%, the lowest level since 1976.
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