Policymakers led by Governor Tiff Macklem increased the benchmark overnight rate by a quarter percentage point to 0.5% at a decision Wednesday in Ottawa, in a widely expected move. Officials also said they expect to raise borrowing costs more because of elevated inflation pressures.
The rate move is the first increase in borrowing costs since 2018, and the start of what some are anticipating will be one of the fastest hiking cycles since the central bank adopted an inflation target three decades ago. Markets are betting the Bank of Canada’s overnight policy rate will hit as high as 1% by June, and 1.75% by this time next year.
“As the economy continues to expand and inflation pressures remain elevated, the Governing Council expects interest rates will need to rise further,” officials said in the