Central banks across the world are actively fighting stubborn inflation. Each regulator has developed its own way of resolving this vital issue, with rate hikes universally used. The Bank of Canada is one of them. The regulator resorted to this measure in an attempt to curb price growth.
Governor Tiff Macklem announced the central bank’s determination to continue the battle against inflation in a statement on the BoC’s official website. “Quantitative tightening continues and is complementing increases in the policy rate. We also expect our policy rate will need to rise further. How much further will depend on how monetary policy is working to slow demand, how supply challenges are resolving, and how inflation and inflation expectations are responding to this tightening cycle,” the statement said.
In October, the Bank of Canada raised the interest rate by 50 basis points to 3.75%. Meanwhile, economists had expected a 75 basis point increase. “The strength of the US dollar is adding to inflationary pressures in many countries. Tighter monetary policies aimed at controlling inflation are weighing on economic activity around the world,” the regulator stated at the time.
