Bank of Canada likely to raise interest rates to battle rising inflation

After keeping its key interest rate near zero since March 2020, the central bank unveiled a pair of rate hikes in March and April - the second was by half a percentage point, the largest in 22 years, reports CTV News.

This week the overnight rate is widely expected to jump by another half-percentage point to 1.5 per cent, “with more increases likely in the months ahead,” Nathan Janzen, assistant chief economist at the Royal Bank of Canada, told the news portal.

According to a report, inflation in Canada is moving at a fast pace for the first time since the 1990s.

Chief Economist of the Canadian Chamber of Commerce, Stephen Tapp, said in a statement: "The top obstacles for Canadian businesses continue to be rising input costs, difficulties hiring workers, and supply chain challenges."

"Rising costs remain by far the number one obstacle for Canadian business right now,” said Tapp.

“These cost pressures will continue to fuel inflation, which will add further pressure for the Bank of Canada to continue raising interest rates at a super-sized pace in their attempt to bring inflation under control," he said.

(Reporting by Suman Das)