At the beginning of the year, the Bank of Canada's key interest rate sat at 0.25 percent. In the months since, inflation has run roughshod over the Canadian economy, prompting the Bank to gradually increase the rate.
On Wednesday, the Bank announced that the interest would be raised to 2.5 percent, a jump of 1 percent over the previous increase in June.
In a written statement, the Bank noted that the overnight rate would be raised to 2.5 percent, with the Bank Rate and deposit rates sitting at 2.75 and 2.5 percent, respectively.
Included in the statement were indicators for national, as well as global inflation, which the BoC predicted would eventually slow down.
"Inflation is too high," said BoC Governor Tiff Mackelm during a press conference, "and more people are getting more worried that high inflation is here to stay."
"We cannot let that happen," he continued, stating that "low, stable and predictable inflation is paramount" to restoring price stability. He stated that the BoC's goal is to reign in inflation to its 2 percent target.
"To accomplish that," Mackelm said, "we are increasing our policy rate quickly to prevent high inflation from becoming entrenched."
He explained the governing council had "decided to frontload the path to higher interest rates" on Wednesday, marking the fourth consecutive rate hike since March.
The Bank hoped that demand would slow as a result, and "allow supply time to catch up."
As Global News reports, RBC analysts predict that the BoC's decision to raise interest rates will send Canada's economy into a "moderate" but "short-lived" recession next year.
Canadians are beginning to realize the impact interest rates have on their cost of living. A recent poll found that 60 percent of Canadians are "feeling the effects of interest rate increases," a seven-point increase over the previous quarter. A full 50 percent said they "will be in financial trouble" if rates continue to rise, and 24 percent admitted to not being financially prepared to handle it.
As a result, nearly half of respondents admitted to "cutting back on non-essentials such as travelling, dining out, and entertainment."
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