Even though the Canada Bank forecasted that the economy might soon enter a mild recession, it decided to announce an interest rate rise that was less than what was anticipated and made it plain that more hikes were still required.
On Wednesday, the central bank raised its interest rate by a 1/4 of a percentage point, bringing it to 3.75 percent; this marks a 14-year high but falls short of the requests for an additional hike of 75 bps.
Since March, it has increased rates by 350 bps, which is one of the most rapid rate-hiking cycles it has ever undertaken.
This era of tightening will eventually come to an end.
Related: CANADA CANCELLED Democracy and NO ONE NOTICED
In prepared comments sent in advance of a press conference, Gov Tiff Macklem said that “we are getting ever closer, but we aren’t there yet.
According to what he had said, the amount that interest rates need to be raised “will depend on how well the monetary policy is functioning to restrain demand, how supply problems are resolving, and how inflation expectations are reacting.”
Macklem went on to say that the banking system was still a long way from achieving its objective of low, steady, and predictable inflation of 2 percent, but that it was attempting to strike a balance between the dangers of under & over-tightening.
Michael Greenberg, a financial planner at Franklin Templeton Investments, said that the decision on the interest rate “was a little bit of a surprise.” He emphasized that inflation was obviously still a concern, and it was possible that there would be more increases.
“It simply seems like the worries about the economic damage and the economic stability consequences of hiking rates so fast are maybe beginning to weigh on them,… [and] it’s possible that this is starting to affect their decision-making. “As a result, they removed their feet off the brake pedal a fraction of the way,” he said.
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