Bank of Canada hikes key interest rate by half a percentage point to 1%

Apr 13 2022, 2:36 pm

The Bank of Canada has increased its key interest rate to 1%.

In an announcement on Wednesday, the central bank is raising the benchmark rate by half a percentage point, the highest amount in more than 20 years.

It cites Russia’s ongoing attack on Ukraine as a factor in Canada’s rising inflation resulting in the rate hike.

“Price spikes in oil, natural gas and other commodities are adding to inflation around the world,” the bank said in a news release. “Supply disruptions resulting from the war are also exacerbating ongoing supply constraints and weighing on activity.”

As Canada’s economy returns to a pre-pandemic pace, the central bank says it’s moving into excess demand. With inflation “persisting well above target,” the bank expects that interest rates will need to rise further.

In February, the country’s inflation rate rose to a new high of 5.7%, the largest hike since August 1991.

The cost of living continues to rise as Canadians are having to shell out more money to pay for gas, groceries, and homes.

National Trending StaffNational Trending Staff

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