2023-06-07 19:28:53
The Bank of Canada announced on Wednesday an unexpected hike in its main interest rate, citing excessive growth in the economy as one of the reasons for the rate hike.
Bloomberg news agency stated that the Monetary Policy Committee headed by Central Bank Governor Tiff Macklem decided to increase the main interest rate to 4.75%, its highest level since 2001, noting that one analyst out of 5 analysts polled expected this step.
“Overall, excessive demand in the economy seems likely to last longer than expected,” the central bank said in a statement.
The yield on two-year Canadian bonds rose after the announcement of the interest rate increase, reaching 4.571, the highest level since August 2007. The Canadian dollar rose against its US counterpart, to 1.3347 Canadian dollars per US dollar.
The Canadian Central Bank stated that monetary policy is not tight enough to achieve a balance between supply and demand and return the inflation rate to the target level of 2%, pointing to the accumulation of evidence that includes gross domestic product growth that exceeds expectations during the first quarter of this year, high inflation rate and booming sector activity. housing.
The Canadian Central Bank’s move came one day after the Australian Central Bank’s decision to raise the main interest rate yesterday by 25 basis points, which is the twelfth consecutive increase to reach 4.1%, warning of further possible hikes.
This came after the annual inflation rate in Australia reached a higher than expected rate of 6.8% in the first quarter of this year.
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