Bank of Canada says higher rates are coming sooner than you think

Canada’s central bank is keeping its benchmark policy interest rate steady for the time being, while signaling that higher rates are coming soon.

In its latest policy decision, the Bank of Canada opted Wednesday to hold its benchmark rate steady at 0.25 per cent, the same level it has been throughout the COVID-19 pandemic.

Nevertheless, the bank’s statement makes it clear that it’s preparing to raise that rate sooner rather than later as the economy gets back on track and the cost of living increases at a faster pace than expected.

“The main forces pushing up prices—higher energy prices and pandemic-related supply bottlenecks—now appear to be stronger and more persistent than expected,” the bank said, adding that it now thinks Canada’s multi-year high inflation rate will go higher still—before coming back down to the range of about two per cent next year.