Top Business Headlines Evening Edition

June 8, 2023

Top News

Aaron Vincent Elkaim/The Globe and Mail

BoC rate hike followed surprise jump in consumer spending, inflation, Beaudry says

After five months on the sidelines, the Bank of Canada was pushed back into action this week by surprisingly strong consumer spending data and worrying signs that the downward trend in inflation has begun to stall, Paul Beaudry, one of the bank’s deputy governors, said Thursday.

The central bank raised its benchmark interest rate by a quarter percentage point on Wednesday. That lifted the policy rate to 4.75 per cent, the highest level since 2001, and restarted the bank’s monetary policy tightening campaign, which had been on hold since January.

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Opinion

Sean Kilpatrick/The Canadian Press

The Bank of Canada rediscovers good old-fashioned ‘excess demand’

David Parkinson

We don’t have a lot to go on, yet, to explain why the Bank of Canada pushed aside its short-lived pause and raised interest rates again. But based solely on the text of Wednesday’s rate announcement, it might have been simple arithmetic.

The central bank appears to have done some math around the stronger-than-expected, first-quarter economic growth data, and abandoned its wait-and-see stand in favour of resuming rate hikes. In the five-paragraph statement that served as the day’s only supporting document for the policy shift, the phrase “excess demand” – absent from rate-decision statements during the bank’s three-month pause in rate hikes – returned with conspicuous prominence.