The Bank of Canada increased the policy rate by 25 basis points to 5 percent, in line with expectations.
The Bank of Canada increased its policy rate by 25 basis points to 5 percent. The decision was made in line with the expectations survey conducted by Bloomberg.
Policymakers, led by Bank of Canada Governor Tiff Macklem, cited surprisingly strong consumption growth, high demand and stubborn price pressures in the resolution text. However, there was no clear statement about the future of interest rates in the text.
In the text of the decision, the bank members stated that they will continue to evaluate the incoming data and that they are “resolute” in their commitments to reduce inflation and said, “We will evaluate whether the excess demand, inflation expectations, wage increase and corporate pricing behaviors are consistent with the achievement of the 2 percent inflation target.”
Inflation was also projected to be around 3 percent for another year before falling to the 2 percent target by mid-2025.
On the other hand, in the text of the decision, which stated that immigration caused an increase in population in the country, it was announced that the high immigration rate helped to support the demand. At the same time, it was noted that population growth was effective in both housing sales and the recovery of prices.