The Bank of Canada is set to announce its interest rate decision this morning along with new economic projections. The Bank of Canada wording on a Canadian $50 bill is pictured in Ottawa on Wednesday, Jan. 11, 2023. (Photo: Canadian Press)

By Canadian Press

BoC raises key interest rate to 5%, expects slower return to inflation target

Jul 12, 2023 | 8:16 AM

OTTAWA, ON – The Bank of Canada raised its key interest rate by a quarter of a percentage point this morning, bringing it to five per cent.

Forecasters were widely expecting the move as the economy continues to run hotter than expected.

The central bank says the rate hike was prompted by elevated demand in the economy and strong underlying inflation pressures.

Its updated economic projections suggest it will take longer to get inflation back to the two per cent target.

It now expects inflation to stall around three per cent for the next year before steadily declining to two per cent by mid-2025.

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The central bank didn’t indicate whether it plans to raise rates again in September, and instead said its governing council will continue to monitor how the economy evolves.

This report by The Canadian Press was first published July 12, 2023.

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