Bank of Canada announces new rate hike

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It noted that “concerns have increased” that inflation could remain persistently higher than that level, although its expectation that it will ease to around 3% by mid-summer remains unchanged.

That annual rate of inflation ticked unexpectedly upwards in April – rising by 0.1% over the prior month – and GDP growth continued at a pace of 3.1% in the first quarter.

Canada’s labour market, meanwhile, remains resilient in the face of the central bank’s efforts to slow the economy, adding 41,000 jobs in April, while the national housing market also shows signs of beginning to heat up again after a months-long slowdown.

The announcement marks a departure of sorts from the Bank’s apparent willingness in recent statements to keep rates where they are – but comes as little surprise, with about one in five economists surveyed by Bloomberg before the decision expecting rates to increase today.

Swap market traders had also raised expectations of an imminent jump prior to the announcement, fully pricing in a rate increase by July 12, the date of the Bank’s next scheduled decision.

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