Bank of Canada Raises Interest Rate Another 0.5% on April 13

Bank of Canada Raises Interest Rate Another 0.5% on April 13

The Bank of Canada has raised its key interest by another 50 basis points onApril13,2022, bringing it up to one percent. This is the second in an expected series of rate hikes slated for 2022, and the biggest single increase since 2000.

The move follows a 0.25-per-cent increase at the Bank’s last interest rate announcement on March 2, which was the first upward move since October 2018, following a trio of decreases in March 2020, to help ease the economic fallout of COVID-19. This new upward trend is intended to rein in the rapid rise of inflation, which hit a 30-year high of 5.1 percent in January, well above the Bank’s projection of two percent.

The Bank cited the unprovoked invasion of Ukraine by Russia as a continuing source of major uncertainty, with spikes in the price of oil, natural gas and other commodities adding to inflation, and exacerbating ongoing supply chain disruptions.

In Canada, the Bank says the economy is chugging on all cylinders, with tight labour markets and wage growth back to pre-pandemic levels. Consumer spending is up as pandemic restrictions continue to ease, and businesses report difficulties meeting demand due to supply chain issues. The housing market is “exceptionally high” but the Bank expects it to moderate.

The Bank of Canada announces its decision on the overnight rate target eight times a year, typically on a Wednesday. The schedule for 2022 is as follows:

  • Wednesday, January 26*

  • Wednesday, March 2

  • Wednesday, April 13*

  • Wednesday, June 1

  • Wednesday, July 13*

  • Wednesday, September 7

  • Wednesday, October 26*

  • Wednesday, December 7

*Monetary Policy Report published
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