In an effort to bring down a national inflation rate that came in last month at its highest level since 1991, the Bank of Canada announced* this morning that its trendsetting policy interest rate has been increased from 0.5% to 1.0%.

Today’s increase follows the 25-basis point hike announced on March 2 and is unlikely to be the last increase we will see this year. There is a good chance the policy interest rate will rise to 2.0% or even higher before the end of 2022.

Raising interest rates is a tricky business because the cure for elevated inflation is the economic drag created by higher borrowing costs. With this in mind, the Bank argues that the national economy is strong enough to absorb the rate hike.

*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 June 1, 2022.

Answer to the previous trivia question: T.S. Eliot describes April as “the cruellest month” in his poem “The Waste Land.”

Today’s trivia question: How much gold is currently stored in Fort Knox?