The Bank of Canada raised its guideline rate this Wednesday from 0.5% to 1% to fight inflation galloping that should reach 6% during the first half of 2022, according to their estimates.
The bank warned that rates should rise further, “as the economy enters a phase of excess demand and inflation is well above target.”
Inflation in Canada reached 5.7% in the 12 months to February, driven by gasoline and food prices.
The institution also stressed that the conflict in Ukraine is a “source of economic uncertainty” that “disrupts the global revival.”
The Bank of Canada forecasts that the country’s economy will grow 4.25% this year, and 3.25% in 2023.