The Central Bank of Canada leaves interest rates unchanged

TORONTO (AP) — Canada’s central bank declined to raise its benchmark interest rate on Wednesday, but said interest rates will need to rise going forward as the economy rebounds.

The Bank of Canada said that going forward, it expects interest rates to rise as it expects economic growth to rebound. The bank maintains its main overnight interbank interest rate target at 0.25%. He indicated that inflation expectations have increased in the short term.

Bank of Canada Governor Tiff Macklem said the bank expects the omicron wave to have less impact on the economy than previous waves of COVID-19.

“Today marks the final step in exiting emergency policies,” Macklem said. He said the bank was removing the commitment to keep the key rate at its floor of 0.25%.

“We want to send a clear signal that interest rates will have to rise,” Macklem said. “Inflation is uncomfortably high.”

This announcement precedes that of the US Federal Reserve.

CIBC chief economist Avery Shenfeld said he expects the Bank of Canada to raise rates in March if the country receives better news on the omicron variant.

“The Bank of Canada deemed that a new pandemic wave was not the right time to embark on a rate hike cycle, or simply wanted to officially end its forecast before pulling the trigger, but n ‘has left no doubt that rate hikes are coming,’ Shenfeld wrote in a note to clients.

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Stephen V. Lee