Bank of Canada Decides to Raise Interest Rate by 100 Basis Points

The Bank of Canada increased the interest rate by 100 basis points to 2.5 percent which is above expectations.

Interest rate move from the Bank of Canada; It raised interest rates by 100 basis points with a surprise decision in the name of efforts to prevent the inflation that affected the whole world as the highest inflation in 40 years from becoming permanent. Tiff Macklem, one of the Bank of Canada officials, noted that the policy rate was raised to 2.5 percent with the announcement made in Ottawa on Wednesday, while warning that the increases could continue. The Central Bank was expected to raise the rate by 75 basis points, but it was decided as 100 basis points. It was stated that it was the first time since 1998 that a decision was taken to increase interest rates at this level. The unexpected rate hike is expected to be an important sign of how much the authorities fear rising inflation, despite the risk of causing serious economic problems. "With excess demand clearly evident in the economy, high inflation and expansion, and more businesses and consumers expecting high inflation to persist for longer, the Governing Council decided to front-load the path to higher interest rates," the Bank of Canada officials said in a statement. To explain the aggressive rate hike, policymakers cited an economy with high and expanding consumer price increases and rising inflation expectations, with "excess demand clearly evident." Officials said they expected to continue raising interest rates further and would act "decisively" to bring inflation back to the target level.