Canada: Bank of Canada raises benchmark rate to 1.5%

The Bank of Canada announced its fourth rate hike since last summer, bringing the central bank overnight rate to 1.5%.

During its decision, the Bank of Canada noted this hike comes in response to a stabilizing housing market, commodities rallying, and an increase in business spending.

This comes on the back of Statistics Canada’s latest findings, which showed an expanding economy, healthy job market, and increasing inflation. Inflation is seen as a key metric for rate hikes, which are used to slow inflation, while rate cuts are used to stimulate the economy.

RFi Group data demonstrates that 38% of Canadian respondents in 18H1 are concerned (score of 4+/5) with inflation, with 31% very concerned with interest rates, showing that Canadians are more concerned with rising inflation than with the changes made to interest rates.

The rate decision was made despite the threatened auto tariffs coming from the US. Stephen Poloz, Governor of the Bank of Canada, noted: “we felt it appropriate to set aside this risk and make policy on the basis of what has been announced”.

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