The Bank of Canada has made their final scheduled announcement of the year, indicating no change to its projection that its policy rate will rise in the middle quarters of 2022.
The central bank said that while it was “closely watching” the inflation issue that has dominated headlines in recent weeks, it would hold its rate steady at 0.25% with rates likely going up sometime around the middle of next year.
The bank has stated that Canada’s economy has seen growth as expected in the third quarter at around 5.5%, with a rebound in consumption and high vaccination rates being a major contribution.
It said CPI (consumer price index) inflation was likely to remain “elevated” through the first six months of next year before dropping back towards the Bank’s target of around 2% in the second half.
The housing activity is appearing to regain strength, specifically in resales. However, the flooding in British Columbia and the new Omicron COVID-19 variant has made a negative impact on growth by “compounding supply chain disruptions and reducing demand for some services”.
The Bank’s governor Tiff Macklem stated, “What our resolve does mean is that if we end up being wrong about the persistence of inflationary pressures and how much slack remains in the economy, we will adjust. Our framework enables us to do just that”.
The Bank of Canada’s next announcement on its policy rate will be schedule to take place on January 26, 2022.
Read the full article by Fergal McAlinden here
Read the Bank of Canada’s full press release here
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