The Bank of Canada is widely expected to raise interest rates another 25-basis points after its latest policy meeting concludes today (July 12).
A majority of economists forecast that the central bank will lift its trendsetting overnight interest rate by a quarter of a percentage point to 5%, which would be its highest level in 22 years.
Financial markets are pricing in a 55% chance for a 25-basis point rate hike later today.
In June, the Bank of Canada increased borrowing costs after pausing its rate increases for several months.
At that time, central bank officials said they remain concerned about persistent inflation and are determined to lower Canada’s annualized inflation rate back down to their 2% target.
Economists expect another interest rate increase today as Canada’s labour market remains relatively strong and the annual inflation rate currently sits at 3.4%.
Most economists who were recently polled by the Reuters News Agency said they don’t expect inflation to fall back to the Bank of Canada’s 2% target until early 2025.
