The Bank of Canada building is pictured in Ottawa on Tuesday, Dec. 6, 2022. The Bank's deputy governor Paul Beaudry delivered an economic progress report in Victoria, offering insight into the central bank's decision to raise its key interest rate to 4.75 per cent. THE CANADIAN PRESS/Sean Kilpatrick
VICTORIA – Bank of Canada deputy governor Paul Beaudry says recent economic data suggests the risk of sticky inflation has gone up, prompting the central bank’s decision to raise interest rates on Wednesday.
Beaudry is delivering a speech today to the Greater Victoria Chamber of Commerce, one day after the central bank announced a quarter percentage point rate increase, ending its pause on rate hikes.
The central bank’s key interest rate now sits at 4.75 per cent, the highest it’s been since 2001.
According to prepared remarks, Beaudry says the combination of stronger growth, a tight labour market and a rise in inflation in April suggested the overheated economy has persisted longer than the central bank expected.
Beaudry says the rapid rise in consumer spending took the central bank by surprise, while buyers appear to be returning to the housing market.
Taken together, Beaudry says the central bank acted to ensure inflation, which was sitting at 4.4 per cent in April, doesn’t get stuck above the two per cent target.
This report by The Canadian Press was first published June 8, 2023.
