Bank of Canada Raises Interest Rates
The Bank of Canada (“BOC”) recently increased interest rates on the back of recently released economic data showing that growth was higher than expected, thereby supporting the bank’s view that growth in the country is becoming more broadly based and self-sustaining. To buttress the Bank of Canada’s view, the bank reported that consumer spending remain robust, underpinned by continued solid employment and income growth and great GDP numbers. This gave the BOC reason to review the MPR and ultimately decide to increase it in a bid to stabilize the economy and possibly eliminate the threat of inflation. This post seeks to analyze the implication of the interest rate hike to the economy.