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Thomas StorringDirector – Economics and Statistics
Tel: 902-424-2410Email:

December 07, 2022

The Bank of Canada today increased its target for the overnight rate by 50 basis points to 4.25%, with the Bank rate at 4.5% and the deposit rate at 4.25%. The Bank is also continuing its policy of quantitative tightening.

Global inflation remains high and broad based with central banks continuing to tighten monetary policy around the world. Economic activity in the United States is weakening despite solid consumption and labour market activity. While the global supply chain disruptions continue to ease gradually, there is a risk that geopolitical events can hamper the progress. Globally, labour markets are tight, and commodity prices are volatile.

In Canada, real GDP increased 2.9% (annualized rate) in the third quarter of 2022, the fifth consecutive quarterly increase. According to the Bank of Canada, Canadian economy continues to operate in excess demand. Housing market activity is moderating from exceptionally high levels as mortgage rates rise. Labour market remains tights with unemployment near historic low levels. With weaker global demand as well as tighter monetary policy, the Canadian economy is expected to register a moderate growth in the second half of the year. 

In Canada, inflation remained at 6.9% in October 2022. Faster price growth for gas and mortgage interest costs were moderated by slowing price growth for food. Inflation excluding gasoline prices increased which indicated further broadening of price pressures specifically in services. The Bank’s core measures of inflation remain around 5.0%. The Bank noted that short-term inflation expectations remain elevate. 

Against the backdrop of persistent inflation and the economy operating in excess demand, the Governing Council continues to asses the impacts of tighter monetary policy on demand along with the supply challenges and inflation expectations. 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 next scheduled date for announcing the overnight rate target is January 25, 2023. An updated Monetary Policy Report will be published at the same time.


Bank of Canada: Rate Announcement

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