OTTAWA – The Bank of Canada raised its overnight rate by 75 basis points, moving its policy rate to 3.25 percent from 2.5 percent. Since March, the bank has increased its policy rate by 300 basis points — the fastest pace since the mid-1990s — in an attempt to bring inflation back to its mandated two percent target. The bank attributes the war in Ukraine, ongoing COVID-19 lockdowns in China, and volatile commodity prices as the main drivers of elevated global inflation.
Statistics Canada reported inflation was at 7.6 percent in July, down from its peak of 8.1 percent in June. The drop was mainly due to a decrease in gas prices; however, other price measures for food and services remained high. However, the bank said Canada’s core measure of inflation continues to rise, which prompts a greater risk that rising prices may become entrenched. The bank anticipates further increases to the policy rate will be needed to bring inflation lower to that two percent target. ”They have set the stage for further rate hikes,” says Kevin Page, president, and CEO of the Institute of Fiscal Studies and Democracy at the University of Ottawa. “They have to probably get their policy rate to 4 percent.” Speaking to reporters in Vancouver, where the federal cabinet ministers have gathered for a retreat, Deputy Prime Minister and Finance Minister Chrystia Freeland said the government will “continue to take a balanced and careful approach as we have done all of this year.”
“This is a challenging global environment economically, we are still dealing with the aftershocks of the COVID recession, we now have Putin’s invasion of Ukraine causing huge challenges for the global economy, principally Europe, but that has an impact on all of us, and Canada is not immune to these challenges,” she said, adding that Canada still has “really strong economic fundamentals.”.. Source: ctvnews.ca
Monday, April 20, 2026
