Canada’s central bank on Wednesday raised its main interest rate by 0.50 points to 4.25%, the seventh consecutive increase, to counter inflation.
This is its highest level for 15 years.
The institution is aiming for inflation of 2%, but it is currently still almost 7%. However, for the first time in months, the Bank of Canada believes that the measures taken are bearing fruit and is not immediately announcing further increases.
Going forward, the Governing Council will assess whether it is necessary to raise the key rate further, the central bank wrote in a press release.
The bank invoked continued strong growth and a tight labor market to justify this latest increase, which exceeded analysts’ expectations, which had forecast an increase of 0.25 points.
Gross domestic product growth in the third quarter, which rose 2.9% year on year, was stronger than expected and there is still excess demand, the bank noted.
However, the latter still considers that growth will stagnate at the end of the year and during the first half of 2023.
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Inflation, which stood at 6.9% in October, is still too high but the bank is seeing early signs that price pressure may be easing.