The Bank of Canada announced* this morning that it is raising its trendsetting policy interest rate from 1.5% to 2.5%. This is the fourth increase so far this year and is 25 basis points higher than expected.

The super-sized increase was deemed necessary by the bank to address an inflation rate that “will likely remain around 8% in the next few months.”

The national inflation rate has been above the upper limit of the Bank’s target range of 1%-3% every month since April 2021 and hit 7.7% in May.

More hikes are expected with numerous forecasters anticipating that the policy rate will rise to 3.25% before the end of the year.

“The Bank expects Canada’s economy to grow by 3.5% in 2022, 1.75% in 2023, and 2.5% in 2024. Economic activity will slow as global growth moderates and tighter monetary policy works its way through the economy.”

“The July outlook has inflation starting to come back down later this year, easing to about 3% by the end of next year and returning to the 2% target by the end of 2024.”

*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 September 7, 2022.

Answer to the previous trivia question: Alberta exported $71.1 million worth of whisky to other countries in 2021.

Today’s trivia question: In what city will you find the headquarters of the European Central Bank?