{"id":1553077,"date":"2022-07-13T17:35:36","date_gmt":"2022-07-13T21:35:36","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1553077"},"modified":"2022-07-13T17:35:46","modified_gmt":"2022-07-13T21:35:46","slug":"bank-of-canada-surprises-with-100bp-rate-hike-to-tame-inflation","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/bank-of-canada-surprises-with-100bp-rate-hike-to-tame-inflation\/","title":{"rendered":"Bank of Canada surprises with 100bp rate hike to tame inflation"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"float:left\"><div class=\"counts mashsbcount\">22<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fbank-of-canada-surprises-with-100bp-rate-hike-to-tame-inflation%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1553077&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>By Julie Gordon and Steve Scherer<\/p>\n<p>OTTAWA (Reuters) \u2013     The Bank of Canada on Wednesday raised its main interest rate by 100 basis points in a bid to crush inflation, surprising markets and becoming the first G7 country to make such an aggressive hike in this economic cycle.<\/p>\n<p>The central bank raised its policy rate to 2.5% from 1.5%, its biggest rate increase in 24 years, and said more hikes would be needed. Economists and money markets had been expecting a 75-basis point increase.<\/p>\n<p>\u201cWe had indicated we were prepared to be more forceful. Today was more forceful,\u201d Governor Tiff Macklem told a news conference after the decision. <\/p>\n<p>\u201cYes, it is a very unusual move to increase by 100 basis points at one decision and that really reflects the very unusual, exceptional circumstances that we find ourselves in.\u201d<\/p>\n<p>Earlier, the central bank said excess demand, high inflation felt across sectors and rising consumer expectations of persistent price gains prompted the super-sized hike, which lifted the policy rate to its highest level since 2008.<\/p>\n<p>\u201cIf this doesn\u2019t get us back into the idea that the Bank of Canada is serious about bringing inflation down, I don\u2019t know what would,\u201d said Jay Zhao-Murray, a market analyst at Monex Canada.<\/p>\n<p>The Bank of Canada\u2019s move follows a 75 basis point rate hike by the U.S. Federal Reserve last month.  <\/p>\n<p>\u201cThe Bank of Canada saw the Fed hike 75 bps and said \u2018Hold my beer,&#8217;\u201d said Royce Mendes, head of macro strategy at Desjardins Group, noting hawkish language in the statement that accompanied the \u201ccolossal move.\u201d<\/p>\n<p>The central bank\u2019s surprise move lifted the Canadian dollar, which was trading up 0.4% at 1.2975 to the greenback by late afternoon. The benchmark Canadian stock index slipped to its lowest since March 2021, before recovering to trade flat.<\/p>\n<p>SOFT LANDING<\/p>\n<p>In its July forecasts, also released on Wednesday, the Bank of Canada said it expected inflation to rise further, saying it would remain around 8% in the next few months. Canada\u2019s inflation rate hit 7.7% in May, near a 40-year high.<\/p>\n<p>The central bank now sees inflation averaging 7.2% this year, falling to about 3% by the end of 2023 and then back to the 2% target by the end of 2024.    <\/p>\n<p>The Bank of Canada has been playing catch up with hot inflation for months, prompting rare attacks from critics and fueling worries that Canadians could lose faith in its ability to contain prices, leading to price spirals.<\/p>\n<p>\u201cOur forecast is for soft landing. As I said, the path to that soft landing has narrowed,\u201d said Macklem, who participated in the decision remotely after recovering from COVID-19. \u201cAnd that is an important reason why we took stronger action today to front-load policy interest rates.\u201d<\/p>\n<p>Still, the 100-bp move coupled with a warning of more hikes to come could spook markets, said economists.<\/p>\n<p>\u201cI think the market is going to be on edge here about the possibility of more upside surprises on rate hikes,\u201d said Doug Porter, chief economist at BMO Capital Markets. <\/p>\n<p>SLOWER GROWTH<\/p>\n<p>The policy rate is now at the nominal neutral rate \u2013 the midpoint between 2% and 3% \u2013 where monetary policy is neither stimulative nor restrictive.<\/p>\n<p>The bank also cut its economic growth forecast for this year to 3.5% from a previous estimate of 4.2%. It predicted growth would then slow to 1.8% in 2023 before rising to 2.4% in 2024. <\/p>\n<p>The slower growth is \u201clargely due to the impact of high inflation and tighter financial conditions on consumption and household spending,\u201d the bank said.  <\/p>\n<p> (Additional reporting by Ismail Shakil in Ottawa, and Fergal Smith and Divya Rajagopal in Toronto; Editing by Deepa Babington)<\/p>\n<p><a href=\"https:\/\/www.oann.com\/?attachment_id=2725896\"><img decoding=\"async\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/07\/tagreuters.com2022binary_LYNXMPEI6C0OD-VIEWIMAGE.jpg\" alt=\"tagreuters.com2022binary_LYNXMPEI6C0OD-VIEWIMAGE\" \/><\/a><\/p>\n<p><a href=\"https:\/\/www.oann.com\/?attachment_id=2725897\"><img decoding=\"async\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/07\/tagreuters.com2022binary_LYNXMPEI6C0O6-VIEWIMAGE.jpg\" alt=\"tagreuters.com2022binary_LYNXMPEI6C0O6-VIEWIMAGE\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Julie Gordon and Steve Scherer OTTAWA (Reuters) \u2013 The Bank of Canada on Wednesday raised its main interest rate by 100 basis points in a bid to crush inflation,<\/p>\n","protected":false},"author":66,"featured_media":2315279,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[],"tags":[],"class_list":["post-1553077","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1553077","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/66"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1553077"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1553077\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2315279"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1553077"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1553077"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1553077"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}