The Bank of Canada raised the policy rate by 50 basis points to 3.75%. In the statement made by the Bank of Canada, it was stated that the monetary tightening continued and the overnight interest rate, which was taken as the basis, was increased by 50 basis points from 3.25 percent to 3.75 percent.
In the markets, the Bank was expected to raise the policy rate by 75 basis points to 4 percent. Emphasizing that inflation continues to be high and broad-based throughout the world, it was noted that the strength of the US dollar contributed to inflationary pressures in many countries.
In the statement, it was stated that tighter monetary policies aimed at controlling inflation put pressure on economic activity around the world, and global inflation is expected to decrease as economies slow down and supply cuts decrease.
It is expected that economic growth will stop at the end of this year and in the first half of next year. it was said. In the statement, it was stated that inflation decreased from 8.1 percent to 6.9 percent in the last three months due to the decline in gasoline prices, but price pressures remained broad-based.
“We expect inflation to decline to around 3 percent by the end of 2023 and return to the 2 percent target by the end of 2024. Future rate hikes will be affected by our assessments of how tightening monetary policy is in slowing demand, how supply problems are resolved, and how inflation and inflation expectations respond. “