The increase represents another attempt to get CPI under control, with Canada’s year-over-year inflation rate coming in at 7.6% in July, well above the central bank’s 2% target.
The Canadian economy remains in relatively good shape and the unemployment rate is at historic lows but many believe an economic slowdown is on the horizon.
Full Bank of Canada statement:
“The Bank of Canada today increased its target for the overnight rate to 3¼%, with the Bank Rate at 3½% and the deposit rate at 3¼%. The Bank is also continuing its policy of quantitative tightening.
“The global and Canadian economies are evolving broadly in line with the Bank’s July projection. The effects of COVID-19 outbreaks, ongoing supply disruptions, and the war in Ukraine continue to dampen growth and boost prices.
“Global inflation remains high and measures of core inflation are moving up in most countries. In response, central banks around the world continue to tighten monetary policy. Economic activity in the United States has moderated, although the US labour market remains tight. China is facing ongoing challenges from COVID shutdowns. Commodity prices have been volatile: oil, wheat and lumber prices have moderated while natural gas prices have risen.
