BANK OF CANADA HOLDS OFF RAISING INTEREST RATES FOR NOW, COULD BEGIN CLIMBING IN MARCH

Jan 26, 2022

By Bob Komsic

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It remains the status quo – but not likely for much longer.
The Bank of Canada has decided to keep its key interest rate at 0.25%, where it’s sat since early in the pandemic.
However, policy makers are also making it clear that emergency economic support is no longer required, indicating the cost of borrowing will go up in the coming months.
”This is a significant shift in monetary policy,” governor Tiff Macklem says.
”[It] signals that interest rates will now be on a rising path.”
However the ongoing uncertainty around the Omicron variant means the central bank is not prepared to start down that road just yet.
The Bank of Canada does say the economy is running at capacity, including a labour market that’s, by most standards, back at pre-COVID-19 levels.
Macklem says interest rates will need to rise to bring inflation back to the bank’s target of 2%, but warns inflation’s likely to creep above 5% for the first quarter before easing by year’s end.
The bank’s next meeting is in March.
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