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Will the latest interest rate hike…

Will the latest interest rate hike be the last one for a while?

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Image credit: Depositphotos.com

The Bank of Canada raised its key interest rate to the highest point in 16 years. At the same time, it signalled that this could be the last hike for a little while.

The quarter of a percentage point increase brings the rate to 4.5 per cent, the highest since 2007. Since sitting at near-zero territory early last year, the central bank has made hikes for eight straight months.

But it also said that it expects this to be the last rate hike of the cycle.

As inflation slows, the need to continue hiking the interest rate lessens. After hitting a high of 8.1 per cent last summer, inflation slowed to 6.3 per cent in January.

“The decline in inflation since the summer is welcome relief for the many Canadians who are struggling to keep up with the rising cost of living,” said Bank of Canada governor Tiff Macklem. “But at more than six per cent, inflation remains too high.”

Though inflation more than three times the bank’s target, they’re confident things are moving in the right direction.

“And we are committed to getting inflation all the way back to two per cent so that Canadians can once again count on low, stable and predictable inflation and sustainable economic growth,” he added.

And while the Bank of Canada didn’t definitively say  that no more rate hikes were coming, Benjamin Reitzes, managing director of Canadian rates and macro strategist, at the Bank of Montreal said the bar has been set higher.

“It looks like a March move is off the table barring some wild data,” he said, according to The Canadian Press. “The April policy decision will be more definitive as we’ll have a few employment and CPI reports by then.”

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