forex newsBank Of Canada Hikes Interest Rate Amid Rising Inflation

Bank Of Canada Hikes Interest Rate Amid Rising Inflation

The Bank of Canada on Wednesday raised their key interest rate despite concerns that trade tensions could hurt the global economy.

The BoC increased its target for the overnight rate to 1 1/2 per cent. The Bank Rate is correspondingly 1 3/4 per cent and the deposit rate is 1 1/4 per cent.

The Bank expects the global economy to grow by about 3 3/4 per cent in 2018 and 3 1/2 per cent in 2019, in line with the April Monetary Policy Report (MPR).

Canada’s economy continues to operate close to its capacity, but “the possibility of more trade protectionism is the most important threat to global prospects,” according to the BoC.

With CPI inflation expected to edged further above the BoC’s 2 percent target, policy makers were compelled to tighten.

“Governing Council expects that higher interest rates will be warranted to keep inflation near target and will continue to take a gradual approach, guided by incoming data,” they added.

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