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MNI BOC WATCH: Macklem Hikes 25, Sees Pause If Growth On Track

(MNI) OTTAWA
OTTAWA (MNI)
Bank of Canada sees signs core inflation has peaked and headline CPI will return to target faster.

The Bank of Canada raised its key lending rate 25bps to 4.5% Wednesday and policy makers expect this to be the peak because of confidence the economy is on track to pull back overheated demand and hasten progress slowing inflation to target.

“If economic developments evolve broadly in line with the Monetary Policy Report outlook, Governing Council expects to hold the policy rate at its current level while it assesses the impact of the cumulative interest rate increases. Governing Council is prepared to increase the policy rate further if needed to return inflation to the 2% target,” policymakers led by Governor Tiff Macklem said in a statement. "There is growing evidence that restrictive monetary policy is slowing activity, especially household spending." The statement is a shift from December's more even-handed comment the Bank was weighing whether or not to hike again. 

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The Bank of Canada raised its key lending rate 25bps to 4.5% Wednesday and policy makers expect this to be the peak because of confidence the economy is on track to pull back overheated demand and hasten progress slowing inflation to target.

“If economic developments evolve broadly in line with the Monetary Policy Report outlook, Governing Council expects to hold the policy rate at its current level while it assesses the impact of the cumulative interest rate increases. Governing Council is prepared to increase the policy rate further if needed to return inflation to the 2% target,” policymakers led by Governor Tiff Macklem said in a statement. "There is growing evidence that restrictive monetary policy is slowing activity, especially household spending." The statement is a shift from December's more even-handed comment the Bank was weighing whether or not to hike again. 

Keep reading...Show less