The Bank of Canada raised its key overnight rate by 50 basis points to 4.25% but opened the door to a pause in further tightening amid clear signs of an economic slowdown across North America.
"Looking ahead, Governing Council will be considering whether the policy interest rate needs to rise further to bring supply and demand back into balance and return inflation to target," the central bank said after taking its suite of official rates to their highest since the start of 2008.
The Canadian dollar fell around half a cent against its U.S. counterpart in reaction to the news before paring losses somewhat to trade at C$1.3613 by 10:15 ET (15:15 GMT).
The Bank noted that the Canadian economy continued to experience excess demand in the third quarter, leaving the labor market tight and unemployment near historic lows. However, it expects a clearer slowdown in the final quarter, saying that recent data have supported its core assumption that growth will "essentially stall through the end of this year and the first half of next year."
Inflation remained well above the BoC's target in October at 6.9%, with core inflation running at around 5% on the year.
The Canadian dollar fell around half a cent against its U.S. counterpart in reaction to the news before paring losses somewhat to trade at C$1.3613 by 10:15 ET (15:15 GMT).
The Bank noted that the Canadian economy continued to experience excess demand in the third quarter, leaving the labor market tight and unemployment near historic lows. However, it expects a clearer slowdown in the final quarter, saying that recent data have supported its core assumption that growth will "essentially stall through the end of this year and the first half of next year."
Inflation remained well above the BoC's target in October at 6.9%, with core inflation running at around 5% on the year.
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Source: investing.com
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