Bank of Canada raises key rate to 1%
Such a dramatic increase has not been made since 2000.
The key rate changed by 0.5%, although everyone expected it would rise by 0.25%. Most likely, the rate will be further increased — at least to 2%, or even more. This is Canada's way of trying to deal with record inflation.
In January 2022, the Bank of Canada expected inflation to be around 5%, but it is already clear that it will be at least 6% in the first half of 2022. The price increases are especially noticeable in grocery stores and gas stations. Fuel prices have risen so much that some provinces have started subsidizing motorists from the state budget.
Also, the Bank of Canada announced that it would no longer replace the bonds when they come to the end of their specified period. The Bank also stopped repurchasing them early. You can learn more about government bonds in a separate article on our website.