The Bank of Canada Hikes Rates Again By 50 bps. Another Jumbo Rate Hike, Signaling More To Come
  
By Sherry Cooper - DLC Chief Economist - June 1, 22
The Governing Council of the Bank of Canada raised the overnight policy rate by a full 50 basis points once again today, marking the third rate hike this year. The two back-to-back half-point increases are without precedent, but so were the dramatic pandemic rate cuts in the spring of 2020. Indeed, with the surge in Canadian inflation to 6.8% in April, the Bank of Canada is still behind the curve. The chart below shows that inflation remains well above the Bank’s forecasts. Today’s press release suggests they now estimate that inflation rose again in May and could well accelerate further.
Today’s policy statement emphasized that “As pervasive input price pressures feed through into consumer prices, inflation continues to broaden, with core measures of inflation ranging between 3.2% and 5.1%. Almost 70% of CPI categories now show inflation above 3%. The risk of elevated inflation becoming entrenched has risen. The Bank will use its monetary policy tools to return inflation to target and keep inflation expectations well anchored.”
“The increase in global inflation is occurring as the global economy slows. The Russian invasion of Ukraine, China’s COVID-related lockdowns, and ongoing supply disruptions are all weighing on activity and boosting inflation. The war has increased uncertainty and is putting further upward pressure on prices for energy and agricultural commodities. This is dampening the outlook, particularly in Europe. In the United States, private domestic demand remains robust, despite the economy contracting in the first quarter of 2022.”
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Book of the Month - The Sea Wolf
Every month I will be featuring a book I've read. This month's feature is The Sea Wolf by Jack London.
This terrific tale of the sea is character driven. Also, a study of human nature. Life, death, courage, hope for survival, immortality and love.
A really good, but under-rated read.
A movie of this book was made in 1941. I may have to watch it....
Wild, Wonky, Wiebe Words
Correctly decipher this month's riddle and win bragging rights among your family and friends!
Contest expires June 30, 2022. Phone 778-808-9911 with your answer.
Last month's riddle was "Eye dune ought won tomb issue. Play suck all tummy!"
And the correct answer was "I do not want to miss you. Place a call to me!"
Tip: Have someone read the clue to you while your eyes are closed.
This month's Riddle: Wattle the hire eights due tomb eye Anne you'll Bud jet?
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