The The Bank of Canada raised interest rates by 25 basis points at its monetary policy meeting on Wednesday, putting them at 0.50%., as expected. The BoC announced that further increases may be required and said it would continue with the reinvestment phase of its balance sheet, keeping its overall holdings of Canadian government bonds at about the same level.
Bank of Canada Statement
“The Russian invasion of Ukraine is a major new source of uncertainty.”
“Now inflation is expected to be higher in the short term than projected in January“.
“Price increases have become more widespread and all measures of core inflation have risen.”
“Persistently high inflation is increasing the risk that long-term inflation expectations could rise.”
“The Russian invasion has pushed up the prices of oil and other commodities, which will add to inflation around the world.”
“Negative sentiment shocks and further supply disruptions could weigh on global growth. Financial market volatility has increased. Situation remains fluid.”
“The Canada’s Q1 growth looks stronger than previously projectedwhile fourth-quarter growth confirms the bank’s view that economic slack has been absorbed.”
“The BoC to use monetary policy tools to bring inflation back to 2.0% target and keep inflation expectations well anchored.
“The entity will consider when to end the reinvestment phase and start the quantitative adjustment.”
“Economies are recovering from the Omicron variant of Covid-19 faster than expected. The rebound in Canada appears to be underway.”
Source: Fx Street
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