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Special Report

Canada Central Bank Policy Research Brief

June 2022

Central Bank Lifts Key Policy Rate For a
Third Time, Indicates Greater Hikes Ahead

Bank of Canada maintains aggressive stance to battle inflation. As previously messaged, the Bank of Canada is following through on its plan to raise the overnight rate multiple times, in an attempt to stymie historic inflation. The most recent 50-basis-point hike on June 1 was the third elevation this year and the second of this magnitude. Based on the central bank’s June statement, additional increases are in store as the year progresses, with a 75-basis-point jump on the table at their next meeting in July. This aggressive response comes amid lingering upward pressure on the price of goods and services, driven by supply chains disruptions, geopolitical conflict, fiscal stimulus and a rapid economic recovery. The consumer price index hit a three-plus decade high in April at 6.8 per cent, above the target range for over a year now. 

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