Bank of Canada delivers jumbo rate hike with more to come
BNN: 'The Bank of Canada raised its policy interest rate by half a percentage point in its biggest hike in 22 years, and said rates are poised to move significantly higher as it aggressively wrestles inflation down from a three-decade high.
'Policymakers led by Governor Tiff Macklem increased the central bank’s overnight benchmark to 1 per cent on Wednesday. Macklem said he expects rates will return to what they consider the “neutral range” of 2 per cent and 3 per cent, with policy makers prepared to move “forcefully” if needed. The bank also said it will stop purchasing government bonds later this month to start shrinking its balance sheet, another form of stimulus withdrawal.
'“The economy can handle higher interest rates, and they are needed,” Macklem said at a news conference in Ottawa. Short-term bonds fell after the report, pushing Canada’s benchmark two-year yield to as high as 2.346 per cent, before reversing those losses. The loonie strengthened, however, gaining 0.4 per cent to $1.2593 per U.S. dollar at 12:29 p.m. in Toronto trading.'