Interest rates increase by 50 points to 4.25%: Bank of Canada

The Bank of Canada increased its key interest rate by half a percentage point, bringing it to 4.25 per cent, the highest it’s been since 2008.

There’s “growing evidence” that higher interest rates are preventing demand in the economy, says the central bank in a media release.

On the other hand, it says inflation is still too high and short-term inflation expectations remain high.

Today’s increase marks the seventh continuous spike, which initially began in March in response to quickly rising inflation.

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After peaking at 8.1 per cent, the annual inflation rate has reduced to 6.9 per cent in October.

Looking forward, the central bank says the governing council will be considering whether the policy interest rate needs to rise further to bring supply and demand back into balance.

The Bank of Canada says they are determined to achieve the two per cent inflation target and bring back price stability for Canadians.

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