(Photo of the Bank of Canada from bankofcanada.ca)(Photo of the Bank of Canada from bankofcanada.ca)
Windsor

Bank of Canada hikes rates again, up 50 basis points

The Bank of Canada announced more pain on Wednesday for those with variable-rate mortgages or looking to renew loans.

Saying global inflation remains high, it announced another hike in its key rate, up 50 basis points to 4.25 per cent.

The hike will mean more pain for financially strapped Canadians, already paying more for loans and everyday staples.

Wednesday's announcement is the seventh rate hike this year and twice the increase many economists anticipated, but the Bank said the "economy continues to operate in excess demand."

Inflation was 6.9 per cent in November. Core inflation remains around 5 per cent, still way above the 2 per cent target.

However, the Bank of Canada admitted earlier efforts to tamp down inflation are having an impact.

"While commodity exports have been strong, there is growing evidence that tighter monetary policy is restraining domestic demand," it said in a statement. "Consumption moderated in the third quarter, and housing market activity continues to decline."

Meanwhile, the Bank hinted the policy interest rate could rise even further to bring supply and demand back into balance and restore inflation to its target.

"Governing Council continues to assess how tighter monetary policy is working to slow demand, how supply challenges are resolving, and how inflation and inflation expectations are responding," continued the statement. "We are resolute in our commitment to achieving the 2 per cent inflation target."

The next scheduled overnight rate announcement is on January 25, 2023.

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