The Bank of Canada is widely expected to raise interest rates for a seventh consecutive time today (December 7) as it tries to lower inflation that is currently at 6.9%.
According to a survey by Bloomberg Markets, the average forecast among economists is for Canada’s central bank to lift its trendsetting overnight interest rate by 50-basis points (half a percentage point) to 4.25%.
However, a growing number of economists have been calling for a 25-basis point rate increase from the Bank of Canada when it makes its final decision of the year today.
Bank of Canada Governor Tiff Macklem emphasized the central bank’s commitment to raising rates at its last meeting in October, saying “We've signalled very clearly that we expect rates will need to rise further.”
Governor Macklem has also said that he expects a significant economic slowdown in the year ahead, but not a prolonged recession.
The Bank of Canada targets inflation at an annualized rate of 2%. Currently, inflation in Canada is running more than three times higher than the central bank’s target.
