Canada Interest Rate

The Bank of Canada raised the target for its overnight rate by 50bps to 3.75% in its October 2022 meeting, below broad expectations that pointed to a more aggressive 75bps increase. Still, it marked the sixth consecutive rate hike, adding to the 350bps in interest rate increases in the current tightening path and pushing borrowing costs to their highest since 2008. Policymakers also signaled that interest rates will need to rise further to curb inflation, as the bank’s preferred measure of core inflation has not shown meaningful evidence of easing. The updated CPI projections point to inflation to be at 3% by 2023 before returning to the target level of 2% by 2024. Regarding growth, the BoC expects the Canadian economy to expand a slower 3.25% this year and less than 1% in 2023. The central bank also said it will continue its policy of quantitative tightening.

source: Bank of Canada