Bank of Canada hikes key interest rate by 1%

By: Thomas I. Likness
Eagle News Service

(Eagle News) — In a surprise move Wednesday, Canada’s central bank has hiked its key interest rate by a full percentage point.

The bank admits the move to raise the rate to 2.5% is unusual.

“It reflects very unusual economic circumstances: inflation is nearly 8% — a level not seen in nearly 40 years,” the bank said in a statement.

The bank says it took the drastic move in an effort to tame inflation, adding the economy is overheated.

“Restoring price stability — low, stable and predictable inflation — is paramount,” said the bank.

Most economists had expected an increase of three-quarters of a percent.

The bank’s goal is to get inflation back to its 2% target with a soft landing for the economy.

It says it doesn’t expect to reach that target until 2024.

Those who will be hardest it by this move are people renewing their mortgages and those with lines of credit.
(Eagle News Service)