The Bank of Canada is set today to announce what will happen to its trendsetting interest rate with job and inflation figures on the rise.
The central bank’s key interest rate target has been at the rock-bottom level of 0.25 per cent since the onset of the pandemic in March 2020 and is unlikely to be raised as part of the last scheduled rate call for 2021.
The bank has said it won’t raise the rate until the economy has healed enough to handle an increase.
The economy grew at an annual rate of 5.4 per cent in the third quarter, almost in line with the bank’s expectations, and job gains in November lowered the unemployment rate to within 0.3 percentage points of what was recorded in February 2020 just before the pandemic.
At the same time, inflation remains above the central bank’s target range of one and three per cent.
Although senior bank officials have said a rate hike could happen as early as April, the updated economic indicators released last week by Statistics Canada had some economists saying a rate increase in January couldn’t be ruled out.
This report by The Canadian Press was first published Dec. 8, 2021.