Bank of Canada Raises Interest Rates to Combat Overheating Economy

The Bank of Canada (Central Bank) has resumed raising the policy interest rate on the 7th contrary to market expectations. The reason is the overheating of the economy.

The overnight interest rate, the main policy interest rate, was set at 4.75%, the highest level since 2001. About one in five economists polled by Bloomberg said they expected the rate hike.

“Overall, the excess demand in the economy appears to be more persistent than expected,” the Bank of Canada said in a statement.

“Monetary policy was not sufficiently restrained to rebalance supply and demand and to sustainably return inflation to the 2% target,” it said. He cited better-than-expected growth in the first quarter, higher inflation, and a pick-up in activity in the housing market.

Bank of Canada keeps policy rate on hold at 4.5%, ready to raise rates further if needed

news-rsf-original-reference paywall">Original title:Bank of Canada Unexpectedly Raises Rates to 4.75%, Ending Pause(excerpt)