Bank of Canada raises benchmark interest rate to 5%
Wednesday's rate hike marks the tenth increase by the central bank since March 2022 and the third this year alone.

The Bank of Canada (BoC) raised interest rates a quarter percent Wednesday, marking the first time the figure has hit 5% in two decades.
Following the announcement, leading financial experts divulged whether Canadians could expect another increase in 2023.
"While the Bank of Canada didn't shut the door to more monetary tightening, Canadians might finally be seeing some light at the end of the rate-hiking tunnel," said Desjardins economist Royce Mendes.
However, CIBC economist Andrew Grantham claimed: "that risks are skewed towards another hike after the summer."
"Global inflation is easing, with lower energy prices and a decline in goods price inflation," said the central bank. "However, robust demand and tight labour markets are causing persistent inflationary pressures in services."
In 2022, Canada welcomed 1.1 million permanent and temporary residents — more than double the 430,000-person quota set by Ottawa that year.https://t.co/Jq9uaeGLki
— Rebel News (@RebelNewsOnline) June 19, 2023
The Bank attributed the "excess demand" in the retail sector and the country's booming population for the hike, contributing to job growth, spending and housing demand.
Coletto's Abacus Data survey published this month found that 61% of respondents consider Canada's 500,000-per-year immigration target too high. Nearly four in ten (37%) of Canadians classify the 500,000 target as "way too high."
The federal government wants 1.45 million more new permanent residents in Canada over the next three years, equivalent to 3.8% of the country's population.
Two-thirds (63%) of respondents believe the number of immigrants entering Canada negatively impacts housing, and half (49%) feel the same about its impact on healthcare.
The Canada Mortgage and Housing Corporation (CMHC) said last year that Canada needs at least 5.8 million homes by 2030 for housing to become affordable again. That would require doubling new housing developments from about 200,000 units to nearly 400,000 each year.
According to the Fraser Institute, Canadian patients waited longer than ever this year for medical treatment, including critical surgeries, treatments and procedures.
— Rebel News (@RebelNewsOnline) December 17, 2022
MORE: https://t.co/cDJ9cy9qYC pic.twitter.com/NlefAiSmOH
In February, CIBC CEO Victor Dodig said Canada could be on the precipice of an unprecedented "social crisis" if Ottawa fails to build more housing to accommodate new immigrants.
Canada's population surpassed 30 million in 1997 and could hit 50 million in two decades. By 2041, two in five Canadians would be foreigners.
"New Canadians want to establish a life here and need a roof over their heads. We need to get that policy right and not wave the flag saying, isn't it great that everyone wants to come to Canada," he said.
Since Statistics Canada released its June labour force survey last week, experts said the net gain of 60,000 jobs last month overheated the economy, with housing supply still exceeding demand. This resulted in another interest rate hike to 4.75% on June 7.
"Many federal politicians seem afraid to touch the complex immigration file for fear of being branded xenophobic or racist by political opponents. Yet, Coletto finds even a majority of immigrants think current targets are too high," according to National Post columnist Sabrina Maddeaux.
The Bank of Canada hiked interest rates again, with PM Trudeau telling reporters, "This is not the news than any Canadian wanted to receive this morning" while speaking at a NATO summit.
— Efrain Flores Monsanto 🇨🇦🚛 (@realmonsanto) July 12, 2023
"We will continue to be there for Canadians through these difficult times." pic.twitter.com/Jt7qZiCFe8
Wednesday's rate hike marks the tenth increase by the central bank since March 2022 and the third this year alone. The other hike occurred on January 25, when the central bank raised the benchmark interest rate to 4.5% — a level last seen in January 2008.
At the time, BoC Governor Tiff Macklem claimed another increase in the central bank's prime rate would lead to a recession for Canada.
"The economy is slowing, and we expect it will continue to slow," he said. "We expect growth through the next two, three quarters to be close to zero."
"Zero growth rates after a period of 3% growth at annual rates that we've recently had is not going to feel so good," testified David Dodge, the former central bank governor, last September.
However, the Bank wrote that Canada's economy has been more resilient than expected, warning it could take longer than expected to tame inflation to its 2% target — until mid-2025.
Trudeau is questioned about Canada's immigration system: "We will continue to do more and more to welcome in people from around the world."
— Rebel News Canada (@RebelNews_CA) April 3, 2023
Sign the petition: https://t.co/aY7QdxxyD0 pic.twitter.com/4zNv0namEd
It also expects consumer spending to remain down through much of 2023, with rising borrowing costs straining many household budgets.
Macklem said in January that costlier interest rates "are slowing household spending" amid the worst inflation in 40 years and concurred that while 2023 is "not going to feel good" for taxpayers, inflation continues to fall. It halved to 3.4% in May from 6.8% last November.
In a November 1 testimony at the Senate banking committee, he predicted a short recession in Canada. "It's not a severe recession," he said.
Finance Minister Chrystia Freeland, in the November 3 Fall Economic Statement, confirmed a probable recession. "Our economy is slowing down," she told the House of Commons.
However, she remained convinced the Fall Economic Statement is "building an economy that works for everyone — an economy that creates good jobs and makes life more affordable for Canadians."
In 2023, the average Canadian family of two or more people will pay $64,610 in total taxes, representing 46.1% of their annual gross income ($140,106)https://t.co/JqJKH4FLxV
— Rebel News Canada (@RebelNews_CA) June 21, 2023
In contrast, the former Parliamentary Budget Officer (PBO) Kevin Page told the Senate banking committee on December 1 that a recession would "hurt small businesses significantly."
The Bank said Canada's labour market remains tight, with wage growth at about 4% to 5%, forcing businesses to increase consumer prices more frequently than usual. Simultaneously, three-in-ten firms see sales falling over the next year owing to weaker domestic demand.
According to a quarterly BoC survey in January, nearly two-thirds of businesses expected a mild recession. It showed that 84% of firms expect inflation to remain above 3% for the next two years, up from 77% in the third quarter.
Several firms said rising interest rates are slowing household demand and demand in the housing market.
Don't Get Censored
Big Tech is censoring us. Sign up so we can always stay in touch.