As expected, the Bank of Canada raised its benchmark overnight interest rate for the seventh consecutive time this year, lifting it 50 basis points to 4.25%.
Interest rates in Canada are now at their highest level since 2008.
However, central bank officials indicated that they are now considering a pause in their rate hike cycle to evaluate the impact on the Canadian economy.
In a news release announcing the latest interest rate increase, the Bank of Canada said: “Governing Council will be considering whether the policy rate needs to rise further to bring supply and demand back into balance and return inflation to target.”
The latest statement from the Bank of Canada is the first time since the start of its current tightening cycle that the language regarding rate hikes has changed. The central bank previously said that policymakers expected that the benchmark rate would need to keep rising.
Still, high consumer prices remain an issue. Inflation throughout Canada currently sits at 6.9%, more than three times higher than the central bank’s 2% annualized target.
The Bank of Canada has now raised its overnight interest rate to 4.25% from a historic low of 0.25% at the start of this year.
The Canadian dollar and bond yields each rose immediately after the latest rate hike was announced, with the yield on two-year Canada benchmark debt increasing to 3.814% from 3.727%.
