The Bank of Canada has announced another increase to its key interest rates, its seventh rate hike in nine months.
It raised its overnight rate by 50 basis points to 4.25 per cent, the highest since January 2008.
“Governing Council will be considering whether the policy rate needs to rise further to bring supply and demand back into balance and return inflation to target,” the bank said in a statement.
The inflation rate remained high at 6.9 per cent in October, well above the bank’s 2 per cent target. Higher gas prices put upward pressure on the cost of most goods and services, according to the Consumer Price Index released by Statistics Canada last month.
“While the tightening cycle likely has reached its zenith, we’ll need the pain of these higher rates to persist for a while to stall economic growth and thereby cool inflation,” Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce, said in a report to investors.