Canada raises key in­ter­est rate to 1.5 per cent

Oman Daily Observer - - BUSINESS -

OT­TAWA: The Bank of Canada hiked its bench­mark in­ter­est rate to 1.5 per cent, the first in­crease since mid-jan­uary, as the Group of Seven econ­omy tries to tame in­fla­tion.

The in­ter­est rate in­crease of 25 ba­sis points — which was ex­pected by an­a­lysts — put the rate at its high­est point in a decade, and the bank said fu­ture hikes were ex­pected.

“The econ­omy seems to be on track,” cen­tral bank gover­nor Stephen Poloz told re­porters.

“We are op­er­at­ing near ca­pac­ity, com­pa­nies are in­vest­ing even if some are hes­i­tat­ing, the labour mar­ket has been strong, and, most im­por­tantly, in­fla­tion is on tar­get.” In­fla­tion “is ex­pected to edge up fur­ther to about 2.5 per cent be­fore set­tling back to 2 per cent by the sec­ond half of 2019,” the bank said in a state­ment.

“Higher in­ter­est rates will be war­ranted to keep in­fla­tion near tar­get,” it said, adding that it would “con­tinue to take a grad­ual ap­proach, guided by in­com­ing data.”

The cen­tral bank how­ever said the im­pact of global trade un­cer­tainty on Cana­dian ex­ports and in­vest­ment had grown, in the face of both an in­ten­si­fy­ing tar­iff war be­tween the US and its part­ners, and the un­known fu­ture of NAFTA. — AFP

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