The Globe and Mail reports in its Thursday, Sept. 8, edition that the Bank of Canada raised its policy rate by 0.75 percentage points on Wednesday, increasing the benchmark overnight rate to 3.25 per cent, the highest level since 2008. The Globe's Mark Rendell writes that the BOC said that interest rates need to keep rising to get consumer prices under control. The Globe says the move pushes monetary policy into restrictive territory, where borrowing costs weigh on economic growth, for the first time in two decades. Wednesday's announcement is another major step in the fastest cycle of rate hikes in a generation. The bank has shifted from near-zero interest rates to a restrictive monetary policy in a little more than six months. Financial markets and private-sector forecasters say the BOC is nearing the end point, or terminal rate, of its tightening cycle. The BOC, however, gave little indication in the one-page statement that announced Wednesday's decision of how much further it intends to go. The BOC said, "Given the outlook for inflation, the Governing Council still judges that the policy interest rate will need to rise further." TD economist Beata Caranci sees the BOC raising rates several more times.
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