OTTAWA—The Bank of Canada hiked its key interest rate by 50 basis points—half a percentage point—to 1 percent and announced an end to its government bond-buying program on April 13.
Both actions were widely anticipated as the Canadian economy runs red hot. The BoC has not raised rates by 50 basis points in a single announcement since 2000.
“With the economy moving into excess demand and inflation persisting well above target, the Governing Council judges that interest rates will need to rise further,” the Bank of Canada said in its interest rate decision statement.
Signs that the Canadian economy is overheating are the 5.7 percent annual inflation rate, which has been above the 3 percent upper limit of the BoC’s inflation target range since April 2021, and the 5.3 percent unemployment rate—the lowest on record since comparable Statistics Canada data became available in 1976.
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