The Bank of Canada has announced an increase in the target for the overnight rate to 4.5%, with the Bank Rate at 4.75% and the deposit rate at 4.5%.

The main reasons for the increase include:

• Global inflation remains high and broad-based.
• The Bank estimates the global economy to grow by 2% in 2023 and 2.5% in 2024.
• Inflation in Canada has declined to 6.3% in December.
• The Bank estimates Canada’s economy grew by 3.6% in 2022.
• The Bank of Canada’s decision to increase the target for the overnight rate is aimed at returning inflation to its 2% target.

Despite the decline in inflation, Canadians are still feeling the impact of high inflation on their essential household expenses. The bank expects the global economy to grow at a slower pace in the coming years, with Canada’s economy expected to grow by 1% in 2023 and 2% in 2024. The next scheduled date for announcing the overnight rate target is March 8, 2023, with the bank publishing its next full outlook for the economy and inflation in April 12, 2023.