Oct 27, 2022
By Jane Brown
Following Wednesday’s news the Bank of Canada had hiked its key lending rate by half of a percentage point, the European Central Bank is going big again.
An interest rate increase of three-quarters of a percentage point is regarded as a done deal for Thursday’s meeting in Frankfurt, Germany.
It’s a sign of determination to contain inflation that’s running out of control at just under 10-percent, well above the bank’s target of 2%.
Analysts say this isn’t the end of the increases and are waiting to hear bank President Christine Lagarde for clues on how high the ECB will go.
Central Bank of Canada Governor Tiff Macklem says interest rates will still need to go up further, to reduce inflation in a meaningful way.
“We are carefully assessing the effects of higher interest rates on economic activity and inflation,” Macklem explained on Wednesday, “And we are being clear with Canadians and focusing on the job we’ve been assigned to restore price stability for the benefit of all.”
Canada’s annual inflation rate dropped slightly in September to 6.9-percent.
Macklem is predicting it will slow to 3-percent by the end of next year before returning to its 2-percent target in 2024.
Meanwhile the U.S. Federal Reserve is expected to raise its rate by three-quarters of a percentage point next week.