The Bank of Canada is expected to raise its benchmark overnight interest rate by another 25-basis points to 4.50% when it holds its latest policy meeting today (January 25).
A majority of economists forecast that Canada’s central bank will raise interest rates for an eighth consecutive time before halting its monetary tightening regime and assessing the impact on the economy.
Core inflation, which excludes volatile food and energy prices, is now 2% lower than its peak last summer, according to the latest data from Statistics Canada.
However, total inflation in Canada currently sits at an annualized 6.3%, which is more than three times higher than the Bank of Canada’s 2% target.
At its last policy meeting, Bank of Canada officials said they would start considering whether to slow or even halt the interest rate increases as their impact on inflation and the Canadian economy takes effect.
There are concerns that the aggressive interest rate hikes could push the Canadian economy into a recession this year.
However, some economists point to a stronger-than-expected jobs report in the final quarter of 2022 as evidence that the Canadian economy remains robust despite higher interest rates.
