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Bank of Canada increases rates by 50 bps, says hikes may be over

Economy Dec 07, 2022 10:11AM ET
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© Reuters. FILE PHOTO: Governor of the Bank of Canada Tiff Macklem walks outside the Bank of Canada building in Ottawa, Ontario, Canada June 22, 2020. REUTERS/Blair Gable/File Photo

OTTAWA, Dec 7 (Reuters) - The Bank of Canada on Wednesday hiked its benchmark overnight interest rate by 50 basis points to 4.25%, the highest level in almost 15 years, and signalled the tightening campaign was near an end.

The central bank, which has raised rates at a record pace of 400 basis points in nine months, cited still-strong growth and tight labor markets as the reason for the latest increase.

But it eliminated the forward guidance it has used since the start of the tightening cycle, dropping language that said rates would have to rise further.

"Looking ahead, Governing Council will be considering whether the policy interest rate needs to rise further to bring supply and demand back into balance and return inflation to target," the bank said in a statement.

Gross domestic product growth in the third quarter, which grew at an annualized 2.9%, was stronger than expected and there is still "excess demand" in the economy, while labor markets remained tight, it said.

Bank of Canada increases rates by 50 bps, says hikes may be over
 

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