Commenting on the first 0.50% rate hike since May 2000 for the Bank of Canada, Rochelle Vaz, associate - Global Capital Markets, at Validus Risk Management, said: “The Bank of Canada raised its policy rate by 0.50% to 1.0%. This marks the central bank’s first 0.50% rate hike since May 2000 and will precede a series of successive rate hikes that financial markets are implying will bring the policy rate to as high as 2.5% by the end of the year. The last time the policy rate was at 2.5% was in October 2008, underscoring the urgent need to rein in inflation expectations.

“The central bank also announced that it would stop its government bond purchases on 25 April to shrink its balance sheet. Its inflation outlook has been adjusted ‘substantially’ higher and it expects inflation to remain well above its range for the rest of the year. The (Bank) expects food, energy, and supply chain constraints to push up inflation.

“The growth outlook for 2022 remains strong on the back of high commodity prices, a tight labour market and rising wage growth forecasts.”