Bank of Canada hikes policy rate by 25 bps to 4.5%

The Bank of Canada (BoC) announced on Wednesday that it hiked its benchmark interest rate by 25 basis points to 4.5% following the January policy meeting. This decision came in line with the market expectation.

In its policy statement, the BoC noted that it is likely to hold the rate at this level while assessing the impact of cumulative rate hikes.

“Output gap in Q4 was between 0.50% and 1.50%, down from upwardly revised 0.75% to 1.75% in Q3.”

“3-month measures of core inflation have come down, suggesting core inflation has peaked.”

“Prepared to increase policy rate further if needed to return inflation to 2% target; continuing the quantitative tightening program.”