Bank of Canada kept its trendsetting interest rate at rock-bottom levels on Wednesday, holding off on planned increases aimed at controlling surging inflation.The central bank’s overnight rate remains at 0.25 per cent, a rate it adopted in a drastic drop in the early days of the COVID-19 pandemic.The move is in keeping with the signal from the Bank of Canada late last year that it would begin to hike interest rates toward the middle of 2022.
However, some economists predicted officials would move earlier in an effort to cut off surging inflation on housing and other consumer goods. ‘Pressing need’ for Bank of Canada to raise interest rates amid inflation surge Statistics Canada reported inflation hit a 30-year high of 4.8 per cent in December, well above the bank’s target range of one-to-three per cent.The Bank of Canada wrote in a monetary policy report released alongside the interest rate decision Wednesday that it expects inflation will remain around five per cent for the first half of 2022, citing supply chain constraints and rising food prices.The central bank expects inflation to fall back down to three per cent by the end of the year and back towards the target rate of two per cent by 2024.The monetary policy report notes uncertainty is “unusually high” around its latest inflation projections amid factors such as the ongoing pandemic and supply chain issues.Bank of Canada governor Tiff Macklem and senior deputy governor Carolyn Rogers are set to discuss the rate decision at 11 a.m.