By Ketki Saxena
Investing.com -- The Bank of Canada announced it will hike its benchmark interest rate by 50 basis points, in a move that was largely expected. The move will raise the bank’s policy rate to 1.5%, and is the second consecutive 50 bp increase as the central bank tries to tame soaring inflation. At last count inflation was at 6.8% - well over the Bank’s mandate of 2%.
The Bank also announced it will continue quantitative easing, and warned it will be even more "forceful" if necessary to combat inflation, which it noted is "persisting well above target and expected to move higher in the near term".
“With the economy in excess demand, and inflation persisting well above target and expected to move higher in the near term, the governing council continues to judge that interest rates will need to rise further,” the bank said in its rate announcement statement.
The consecutive increases mark the first time the Bank of Canada has hiked rates 50 basis points in back-to-back decisions in nearly 25 years.
Another 50 basis point hike is expected at the Bank's next meeting in July. Analysts expect the rate to be at 3% by the end of the year.