By: Thomas I. Likness
Eagle News Service

(Eagle News) — For a second consecutive month, Canada’s central bank has hiked its key interest rate Wednesday by a quarter of a percent to 5.0% in another attempt to cool the economy.

Rates are at their highest level in 22 years.

Although Canada’s inflation rate fell to 3.4% in May, the bank said it is still concerned about rapidly rising prices.

 “The downward momentum has come more from lower energy prices, and less from easing underlying inflation,” Bank of Canada said in a statement Wednesday.

“The stubbornness of core inflation in Canada suggests that inflation may be more persistent than originally thought,” the bank added.

The latest increase puts pressure on consumers who are having a tough time making ends meet.

A recent report says more than half of Canadians are so financially stressed that they are just $200 away from not being able to pay their bills.

As higher interest rates work their way through the economy, the bank expects economic growth to slow to about 1% in the second half of this year and the first half of 2024.

Borrowing costs will rise

For consumers, the increase means it will cost more to borrow money.

Hard hit will be people either buying a home or renewing their mortgage.

And since financing of other big-ticket items will cost more that could put the brakes on consumer spending.

(Eagle News Service)