OTTAWA—The Bank of Canada raised its overnight rate target by a quarter percentage point (25 basis points) to 5 percent on July 12 in response to more persistent excess demand in the economy and slowing downward momentum with inflation.
“Canada’s economy has been stronger than expected,” the BoC said in a statement.
The central bank gave no indication that it is pausing or has finished raising interest rates.
“Governing Council remains concerned that progress towards the 2 percent target could stall,” the BoC said.
In its July monetary policy report (MPR) which includes quarterly forecasts for growth and inflation, the BoC projects inflation to hover around 3 percent for the next year before returning to its 2 percent target in the middle of 2025—about two quarters later than forecasted in January and April….