Key Interest rates rise again.
The Bank of Canada’s key interest rate rises on Wednesday for the first time since the pandemic has started. This increase in interest rates has come in the form of a quarter of a percentage point to 0.5 per cent. This is in an effort to help inflation, which has reached the highest level since 1991.
This increase is expected to prompt other big banks throughout Canada to follow behind, which will increase the cost of loans. Senior-decision makers at the Bank of Canada are foreshadowing that interest rates will need to rise even further. However, this is dependent on how the bank views the Canadian economy.
Restriction Threat
Labor market setbacks are expected to only be temporary, despite the loss of 200,000 jobs that came as a result of the Omicron variant. The ease of restrictions in several provinces (and others following right behind) should strengthen household spending. However, the risk of new Covid variants will always pose a threat to the well-being of the Canadian economy.
Inflation Rate Affect
With the start of the pandemic in March of 2020, the Bank of Canada cut its key interest rate to 0.25%. This is the emergency level, in order to help the economic shock. In January of this year, the annual inflation rate was 5.1%, the highest in three decades. However, this was before Russia’s invasion of Ukraine. This invasion has caused oil prices to skyrocket and created new supply disruptions. In order to keep inflation and expectations anchored, the bank plans to use interest rates to get inflation rates back to the targeted 2 per cent.
To view the full version of this story regarding Canada’s key interest rate rising and further statistics relating to this article, click here to see the full article by the Toronto Sun.
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