The Bank of Canada (BoC, its acronym in English) raised its interest rates by 50 basis points (bp), to 4.25%, and stated that it continues with the quantitative tightening (QT, its acronym in English) already in progress, with an eye on inflation rates, the country’s Gross Domestic Product (GDP) and the labor market.
According to a statement on the interest rate decision, with widespread world inflation and a stronger than projected third quarter GDP in Canada, the central bank decided to stick with its QT policy.
However, the Canadian BC highlights that it will consider whether the rate will need to rise further to bring supply and demand back into balance and make inflation return to target.
According to the Canadian monetary authority, in general, the data support the BC’s perspective that growth will stagnate until the end of this year and the first half of next year.
Still, he points out that, although commodity exports have been strong, “there is growing evidence that a more restrictive monetary policy is restricting domestic demand”, as consumption moderated in the third quarter and the activity of the real estate market continues to decline. .
The Bank reinforces its commitment to reach the inflation target of 2%, restoring price stability. The BC says that inflation “is still very high” and that short-term expectations for it also “remain high”.
The next scheduled date to announce the rate target is January 25th. “The Bank will publish its next full outlook for the economy and inflation, including risks to the projection”, he informs.
Source: CNN Brasil

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