Bank of Canada increases policy interest rate by 50 basis points, continues quantitative tightening

Bank of Canada increases policy interest rate by 50 basis points, continues quantitative tightening

The Bank of Canada today increased its target for the overnight rate to 1½%, with the Bank Rate at 1¾% and the deposit rate at 1½%. The Bank is also continuing its policy of quantitative tightening (QT).

Inflation globally and in Canada continues to rise, largely driven by higher prices for energy and food. In Canada, CPI inflation reached 6.8% for the month of April – well above the Bank’s forecast – and will likely move even higher in the near term before beginning to ease. As pervasive input price pressures feed through into consumer prices, inflation continues to broaden, with core measures of inflation ranging between 3.2% and 5.1%. Almost 70% of CPI categories now show inflation above 3%. The risk of elevated inflation becoming entrenched has risen. The Bank will use its monetary policy tools to return inflation to target and keep inflation expectations well anchored.

The increase in global inflation is occurring as the global economy slows. The Russian invasion of Ukraine, China’s COVID-related lockdowns, and ongoing supply disruptions are all weighing on activity and boosting inflation. The war has increased uncertainty and is putting further upward pressure on prices for energy and agricultural commodities. This is dampening the outlook, particularly in Europe. In the United States, private domestic demand remains robust, despite the economy contracting in the first quarter of 2022. US labour market strength continues, with wage pressures intensifying. Global financial conditions have tightened and markets have been volatile.

Canadian economic activity is strong and the economy is clearly operating in excess demand. National accounts data for the first quarter of 2022 showed GDP growth of 3.1 percent, in line with the Bank’s April Monetary Policy Report (MPR) projection. Job vacancies are elevated, companies are reporting widespread labour shortages, and wage growth has been picking up and broadening across sectors. Housing market activity is moderating from exceptionally high levels. With consumer spending in Canada remaining robust and exports anticipated to strengthen, growth in the second quarter is expected to be solid.

With the economy in excess demand, and inflation persisting well above target and expected to move higher in the near term, the Governing Council continues to judge that interest rates will need to rise further. The policy interest rate remains the Bank’s primary monetary policy instrument, with quantitative tightening acting as a complementary tool. The pace of further increases in the policy rate will be guided by the Bank’s ongoing assessment of the economy and inflation, and the Governing Council is prepared to act more forcefully if needed to meet its commitment to achieve the 2% inflation target.

Information note

The next scheduled date for announcing the overnight rate target is July 13, 2022. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR at the same time.

Sam Ansari

Principal Mortgage Broker

Centum Liberty Mortgages

7191 Yonge St. Suit 505

Thornhill, ON L3T 0C4

905-881-4990

Sam Ansari

Website: https://samansari.com

Centum Liberty Mortgages Corp. | Shahram(Sam) Ansari-Mahyari About UsCENTUM LIBERTY MORTGAGES CORP is one of Richmond Hill, , Ontario, ’s leading mortgage brokerage firms, offering seamless solutions to all your mortgage needs. Whether you want to buy a new home, set up a business or even refinance an existing loan or mortgage, we offer you the perfect solution to cater to your specific requirement. Customer Oriented Services At CENTUM LIBERTY MORTGAGES CORP, we put our customers first and strive to serve them better. Our ever-increasing clientele is a clear indication of our commitment and focus to serve them better. We help our customers pick the right mortgage solutions according to their need, and then personalize them to suit their individual requirements. Our aim is not only to provide the best service but also to establish a long-lasting relation with our customers. Highly Qualified and Experienced Mortgage Staff Our team at CENTUM LIBERTY MORTGAGES CORP comprises of some of the most dynamic and experienced personnel from the mortgage industry, having a thorough knowledge of the Calgary, area. We will provide all the necessary advice and guidance that you might require for your mortgage application, interest rate negotiation, or any other related procedure. We constantly work towards offering you the best solution in the most cost-effective manner. Efficiency through Flexibility The mortgage industry is extremely dynamic and volatile. Rates may change drastically in a matter of hours. CENTUM LIBERTY MORTGAGES CORP is quick to detect such changes and keeps its customers well informed and updated at all times. Our processes and systems are flexible and easily adapt to such fluctuations so that the customer is never at a loss. Industry Leading Products and Services We offer a wide array of products, tools and services that are designed specifically keeping the mortgage industry in mind. Our online tools and calculators take care of all the numbers and calculations involved, quickly and accurately. Centum Liberty Mortgages.

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