Another Interest Rate Hike by the Bank of Canada Announced

The Bank of Canada (BoC) announced another expected increase in its benchmark interest rate - this time doubling the rate to 1.00% and citing increasing inflationary pressures. The BoC forecast for the CPI has increased to almost 6% in the first half of the year, and is now expected to remain well above the Bank's "control range" of 1% to 3% throughout the year. At the same time, the Bank announced it would begin quantitative tightening on April 25. The announcement reiterated March's statement that interest rates will need to rise further, and many pundits expect they will end the year at 2.00%, with the increases liikely happening in 0.25 basis point increments. 

The Bank also revised its growth outlook for Canada, reflecting recent strong economic conditions. It is now calling for 4.25% increase in GDP this year, 3.25% in 2023 and 2.25% in 2024. At the same time, they are forecasting a slight decrease in their global GDP forecast due to increased volatility due to the war in Ukraine and tightening of global financial conditions, as many central banks are increasing their overnight rates and also entering a period of quantitative tightening. The full announcement is available here.