The Bank of Canada has raised rates again. Here’s a timeline of how we got here
OTTAWA — The Bank of Canada raised interest rates again to 3.75 percent on Wednesday morning, continuing one of the fastest monetary tightening cycles in history amid warning signs of a possible recession.
Here’s how we got here:
Oct. 24, 2018: The Bank of Canada’s interest rate hit 1.75 percent after gradually rising since the 2015 oil price crash that swept the Canadian economy. This phrase remained unchanged throughout 2019.
March 4, 2020: The Bank of Canada cut interest rates by half a percentage point to 1.25 percent amid economic concerns over COVID-19, just days before the World Health Organization declared a global pandemic.
March 13, 2020: The Bank of Canada announced in a rare unscheduled announcement that it would cut its overnight target by another half a percentage point to 0.75 percent effective March 16. At the time, the central bank described the decision as a “proactive measure” in response to the worsening of the pandemic and the significant drop in oil prices.
March 27, 2020: The Bank of Canada cut interest rates to 0.25 percent, a record low, and launched a program of quantitative easing (or a government bond-buying program) to further stimulate the economy as COVID-19 continues to unfold spread the world.
Oct 27, 2021: As the economy shows signs of renewed life and COVID-19 restrictions are lifted, the Bank of Canada announced it is ending its quantitative easing program.
March 2, 2022: After keeping interest rates at 0.25 percent for two years, the Bank of Canada raised them to 0.50 percent. This came amid stubbornly high inflation and an increasingly volatile global economic landscape, fueled by Russia’s invasion of Ukraine.
April 13, 2022: The Bank of Canada raises its key interest rate by half a percentage point to one percent. The last time the central bank raised the federal funds rate by half a percentage point instead of a quarter point was in May 2000.
June 1, 2022: Earlier this summer, the Bank of Canada raised its policy rate by another half a percentage point to 1.5 percent – the fastest year-on-year increase in more than three decades, in a bid to stem a higher-than-expected rate of inflation 6.8 percent.
July 13, 2022: As forecast, another rate hike came later in the summer when the Bank of Canada hiked its policy rate by a full percentage point, a rare move and the largest single rate hike since August 1998.
September 7, 2022: For the fifth straight year this year, the Bank of Canada raised its policy rate to 0.75 percent for a total of 3.25 percent — the highest policy rate since May 2008. In an Oct. 6 speech, the governor said of the Bank of Canada, Tiff Macklem, that there is still more to be done.
October 26, 2022: The Bank of Canada raises its key interest rate by half a percentage point to 3.75 percent. The central bank said interest rates must rise further to curb decades of high inflation. Earlier in the year, economists were expecting the rate hike cycle to be complete by October.
– By Caitlin Yardley
This report from The Canadian Press was first published on October 26, 2022.
The Canadian Press