The Bank of Canada has just hiked its interest rate by another 25 points to five per cent — the second quarter-point hike since June’s interest rate increase to 4.75 per cent. The central bank has been steadily increasing interest rates over the past three years in an effort to tame inflation.
While inflation is finally levelling out — June’s inflation rate was 3.4 per cent, the lowest since it peaked at 8.1 per cent in June 2022 — it still remains higher than the central bank’s two per cent target.
One of the reasons prices are now falling is because the economic impact of the Russian invasion on Ukraine has been fading over the past few months. Downward trends in the price of raw materials and industrial prices are also playing a role.
