The Bank of Canada is keeping its key interest target on hold at 0.25 per cent as it says inflation now appears stronger and more persistent than expected.
The central bank also says it is ending its quantitative easing program that aims to boost the economy by buying government bonds.
The bank now forecasts that annual inflation rates will continue their upward swing through the rest of year, averaging 4.75 per cent.
Driving the rise in prices are global forces that have snarled supply chains, pushed up costs for companies and limited the supply of in-demand goods.
Those forces are similarly weighing on economic growth, which has received a recent bump from restriction rollbacks and a rebound in consumer spending.
The Bank of Canada is revising down its expectations for growth in the Canadian economy this year to 5.1 per cent from its previous forecast of 6.0 per cent. Growth next year is now expected to clock in at 4.3 per cent, down from an earlier forecast for 4.6 per cent.
Canada’s inflation rate hits 4.4%, highest level since 2003
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