The Bank of Canada increased its policy rate by 0.5%, marking the seventh consecutive and final rate hike in 2022. This increase was expected as the Bank continues its efforts to combat persistent inflation.
In October, Canada’s inflation remained at 6.9% with many goods and services showing large price increases. The bank indicated that our economy continues to operate in excess demand and unemployment is still at historic lows. A tighter monetary policy is starting to affect domestic demand and the bank continues to expect economic growth to slow down for the remainder of the year and into the first half of 2023.
In its announcement, the bank did not rule out further rate increases indicating that the Governing Council will be assessing whether the policy interest rate needs to rise further to bring supply and demand back into balance. However, this is the first time the bank didn’t say more hikes were needed.
The rate increase affects the cost of borrowing for various loans, including variable-rate mortgages and lines of credit. If you have any questions about your mortgage or how this increase will impact you, please reach out to me.
The next Bank of Canada announcement is scheduled for January 25th, 2023. I’ll make sure to keep you informed.