Looking for relief on rates? Don’t look to the Bank of Canada

The Bank of Canada hiked the overnight rate by 75 bps today, in line with Desjardins’ and market expectations. This takes the Bank’s policy rate to 3.25%. While acknowledging that inflation eased in July given a drop in gasoline prices, “… the Governing Council still judges that the policy interest rate will need to rise further.” Looking ahead, the Governing Council’s job is going to get a lot harder. Economic growth is clearly slowing, and sustained monetary policy tightening is only going to exacerbate this.