The Bank of Canada announced Wednesday that it has decided to raise its key interest rate by 25 basis points to 4.75% while stating that it will continue with its policy of quantitative tightening.
Reflecting on the unexpected decision, the Bank expressed that "monetary policy was not sufficiently restrictive to bring supply and demand back into balance and return inflation sustainably to the 2% target." Market analysts expected the bank to keep the official interest rate at 4.5%.
However, the statement also mentioned that quantitative tightening was helping to support the monetary policy stance and normalize the Bank's balance sheet. "The Bank remains resolute in its commitment to restoring price stability for Canadians," the institution concluded.
