Ottawa: The Bank of Canada hiked its benchmark interest rate to 1.5 per cent, the first increase since mid-January, as the Group of Seven economy tries to tame inflation.
The interest rate increase of 25 basis points — which was expected by analysts — put the rate at its highest point in a decade, and the bank said future hikes were expected.
“The economy seems to be on track,” central bank governor Stephen Poloz told reporters.
“We are operating near capacity, companies are investing even if some are hesitating, the labour market has been strong, and, most importantly, inflation is on target.” Inflation “is expected to edge up further to about 2.5 per cent before settling back to 2 per cent by the second half of 2019,” the bank said in a statement.
“Higher interest rates will be warranted to keep inflation near target,” it said, adding that it would “continue to take a gradual approach, guided by incoming data.”
The central bank however said the impact of global trade uncertainty on Canadian exports and investment had grown, in the face of both an intensifying tariff war between the US and its partners, and the unknown future of NAFTA. — AFP
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