Bank of Canada: “We’re Pausing to Assess Whether We’ve Done Enough,” Hikes by 1/4% to 4.5%, QT Continues

By Wolf Richter

2023.02.01

The Bank of Canada hiked its policy rates by 25 basis points on Wednesday, the 8th rate hike in a row, totaling 425 basis points in 10 months, bringing the target of the overnight rate to 4.5%. QT will continue and “is complementing the restrictive stance of the policy rate,” the BOC said in the statement.

The coming pause at 4.5%: “If economic developments evolve broadly in line” with BOC’s outlook, it “expects to hold the policy rate at its current level while it assesses the impact of the cumulative interest rate increases.”

BOC Governor Tiff Macklem said later on Wednesday in an interview with Reuters that the BOC would pause as long as needed to judge the effectiveness of the cumulative increase in rates and think carefully about the next steps.