release<\/a>.<\/p>\nInterest rate hikes were anticipated after data released in December confirmed that inflation had reached a 30-year high, with the Consumer Price Index (CPI) hitting 4.8 per cent.<\/p>\n
\u201cPersistent supply constraints are feeding through to a broader range of goods prices and, combined with higher food and energy prices, are expected to keep CPI inflation close to five per cent in the first half of 2022,\u201d the release said. \u201cAs supply shortages diminish, inflation is expected to decline reasonably quickly to about three per cent by the end of this year and then gradually ease towards the target over the projection period.\u201d<\/p>\n
Canada\u2019s economy has rebounded strongly from the COVID-19 crisis and employment numbers have nearly recovered to pre-pandemic levels. However, uncertainty over the Omicron variant and resulting lockdowns in Ontario and Quebec altered the Bank of Canada\u2019s outlook heading into 2022.<\/p>\n
“Looking ahead, the Governing Council expects interest rates will need to increase, with the timing and pace of those increases guided by the Bank\u2019s commitment to achieving the two per cent inflation target,” the release said.<\/p>\n
Investors expect as many as six rate hikes this year, which would lift the policy rate to its pre-pandemic level of 1.75 per cent.\u00a0The Bank of Canada hasn’t had a policy rate higher than 1.75 per cent since before the 2008 financial crisis.<\/p>\n
The\u00a0next announcement for the Bank of Canada\u2019s overnight rate target will take place on March 2, 2022.<\/p>\n
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<\/a>Photo: Supplied<\/em><\/p>\n