Bank of Canada may continue to raise rates
2022.12.21 13:12
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Bank of Canada may continue to raise rates
Budrigannews.com – According to data released on Wednesday, Canada’s annual inflation rate decreased to 6.8% in November as the price of gasoline rose more slowly. This leaves the door open for another interest rate increase in January.
Inflation was expected to fall to 6.7% from 6.9% in October, according to analysts. According to Statistics Canada, consumer prices increased by 0.1% from October, exceeding analysts’ expectations of a flat rate. Prices increased by 5.4% in November, compared to a gain of 5.3% in October.
Derek Holt, vice president of capital markets economics at Scotiabank, stated, “The underlying core gauges still say that we are past the peak for very hot inflation numbers, but not exactly cool, still tracking above the Bank of Canada’s target.”
According to Royce Mendes, head of macro strategy at Desjardins Group, “Today’s data will leave the door open to a 25 basis point rate hike in November.”
Mendes, on the other hand, still anticipates a pause following seven rate increases in a row and points out that additional important data will be released prior to the central bank’s next policy setting meeting on January 25.
The bank has stated that it will set the policy rate more dependent on data in the future. Currency markets see a 45% opportunity of a 25 premise point rate expansion in January, up from 42% before the information.
The Bank of Canada has climbed rates at a record speed of 400 premise directs in nine months toward 4.25% – a level last found in January 2008 – to battle expansion that is far over its 2% objective.
According to Statscan, price declines in Western Canada were primarily responsible for the 13.7% increase in gasoline prices after a 17.8% increase in October.
In contrast, rent and mortgage interest rates rose in November, accelerating housing costs. The largest annual increase in mortgage costs since February 1983 was 14.5%.
Compared to October’s increase of 11.0%, food prices increased by 11.4% year over year.
According to a note written by Doug Porter, chief economist at BMO Capital Markets, “Turning the temperature down on inflation is proving to be an achingly slow process, and we suspect this may be a theme for 2023.”
CPI-median and CPI-trim, two of the central bank’s most important inflation measures, averaged 5.2% in November, down from 5.1% in October. The bank has stated that the CPI-common has become less reliable as a result of large revisions.
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The Canadian dollar was little changed throughout the day, trading at 1.3615 to the US dollar, or 73.45 cents.
