OTTAWA, Dec 7 (Reuters) – The Bank of Canada on Wednesday hiked its benchmark overnight interest rate by 50 basis points to 4.25%, the highest level in almost 15 years, and signalled the tightening campaign was near an end.
The central bank, which has raised rates at a record pace of 400 basis points in nine months, cited still-strong growth and tight labor markets as the reason for the latest increase.
But it eliminated the forward guidance it has used since the start of the tightening cycle, dropping language that said rates would have to rise further.
“Looking ahead, Governing Council will be considering whether the policy interest rate needs to rise further to bring supply and demand back into balance and return inflation to target,” the bank said in a statement.
Gross domestic product growth in the third quarter, which grew at an annualized 2.9%, was stronger than expected and there is still “excess demand” in the economy, while labor markets remained tight, it said.
(Reporting by Steve Scherer, editing by David Ljunggren)
((Reuters Ottawa bureau, +1 647 480 7921; [email protected]))
