Toronto (Canada), June 7. The Bank of Canada surprised on Wednesday by raising interest rates by a quarter point, which puts them at 4.75%, the highest level since 2001.
The Canadian central bank justified its decision by the persistence of “excess demand” in the economy, higher than expected.
In a statement, the monetary authority said consumer prices are falling thanks to lower energy prices, although core inflation, which excludes energy and food prices , “remains stubbornly high”.
The Bank of Canada added that the national economy grew more than expected in the first quarter, by 3.1%, at the same time as the rise in consumption “was surprisingly strong and wide”.
This caused inflation to rise to 4.4% in April for the first time in 10 months.
Faced with this situation, the Bank of Canada decided to raise interest rates, considering that monetary policy “was not enough to balance supply and demand and bring inflation down to 2%”.
Wednesday’s rise is the ninth since in January 2022 the Bank of Canada restarted increases in the index to control high inflation growth.
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