Money in Canada

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Canada - Money

Bank of Canada hikes rates by 50 basis points in October

On 26 October, the Bank of Canada (BoC) raised its target for the overnight rate from 3.25% to 3.75%, and announced it was continuing to reduce the stock of outstanding government bonds.

The decision aimed to curb inflation, which is still over double the upper bound of the Bank’s 1.0–3.0% target range despite having declined from its mid-year peak. Core inflation is roughly double the upper bound. The Bank also pointed to high near-term inflation expectations, the tight labor market and excess domestic demand as additional factors behind the hike.

In its forward guidance, the Bank reiterated that interest rates would need to continue to rise in order to ensure inflation converges to the 2.0% target. The Consensus is for rates to peak at slightly above 4% in mid-2023 before dipping slightly by year-end.

The BoC’s next policy announcement will be on 7 December.

Our panelists project the target for the overnight rate to end 2023 at 3.76% and 2024 at 2.95%.

Canada - Money Data

2015   2016   2017   2018   2019  
Money (annual variation in %)6.0  8.5  5.8  5.2  7.8  

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Canada Money
Note: Annual variation of M2++ in %.
Source: Bank of Canada.

Canada Facts

Value Change Date
Bond Yield1.701.00 %Dec 31
Exchange Rate1.300.15 %Jan 01

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