After holding interest rates steady for seven quarters in a row, the Bank of Canada raised its key rate from 2.25 percent to 2.5 percent in response to rising inflation.
Bank of Canada Governor Tiff Macklem said on Oct. 28 that the increase was meant to prevent higher global energy prices from leading to generalized inflation in Canada. He also signalled that more interest rate increases may be needed.
The Bank also released its quarterly Monetary Policy Report (MPR), outlining its latest forecasts for inflation and the economy.
Rate Increase Aimed at Inflation
The Bank of Canada had expressed more optimism around inflation projections in early July, when Macklem said the economic data had increased policy makers’ “confidence that the economy is indeed working its way through this period of global upheaval.” At that time, the United States and Iran had reached a ceasefire and were in talks to end the conflict that had roiled energy markets….