Breaking: BoC hikes interest rates by 50 bps to 1.00%

The Bank of Canada announced on Wednesday that it had increased benchmark interest rates by 50 bps to 1.00% from 0.50%, as widely expected by analysts.

The central bank also announced plans to begin reducing the size of its balance sheet, also known as Quantitative Tightening (QT), from 25 April, given that it sees an increasing risk that expectations of elevated inflation could become entrenched. Interest rates will need to rise further and higher rates should moderate growth in domestic demand, the bank noted. 

Following the Bank of Canada’s (BOC) decision to hike the policy rate by 50 basis points to 1% in April, Governor Tiff Macklem will deliver his remarks on the policy outlook and respond to questions from the press. Macklem’s presser will start at 1500 GMT.

“The Canadian economy moving into excess demand, labour market conditions are tight; the economy is starting to operate beyond its productive capacity,” the BOC said. In its quarterly Monetary Policy Report, the bank also revised the inflation forecast for 2022 to 5.3% from 4.2% previously.