indicatorThe Owl

Bank of Canada opts for 50 basis point hike

This is the seventh rate increase in a row

By Rob Roach, ATB Economics 7 December 2022 1 min read

The Bank of Canada announced* this morning it is raising its key policy interest rate from 3.75% to 4.25%.

The news release noted that, despite signs inflation may be easing, it is “still too high and short-term inflation expectations remain elevated.”

“The longer that consumers and businesses expect inflation to be above the target, the greater the risk that elevated inflation becomes entrenched.”

It remains to be seen how high the Bank will take rates with the news release indicating that the Bank’s Governing Council will base the decision on how the economy and inflation expectations respond to the steps it has taken so far.

We still think it is likely there will be at least one more rate hike of 25 basis points before the Bank pauses its current cycle of increases.

*Each year, the Bank of Canada sets eight fixed dates on which it announces whether or not it will change its policy interest rate. The next announcement is scheduled for January 25, 2023. 

Answer to the previous trivia question: According to Guinness World Records, the tallest pyramid in the world is the pyramid of Khufu at Giza (a.k.a. the Great Pyramid) at 146.7 m high when completed around 4,500 years ago. Erosion and vandalism have reduced its height to 137.5 m.

Today’s trivia question: How many Governors has the Bank of Canada had?

The Bank of Canada has increased its key policy interest rate seven times in 2022

The Bank of Canada has increased its key policy interest rate seven times in 2022

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