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Economics
Central Banks

Bank of Canada Dials Back Pace of Hikes Amid Recession Fears

  • Macklem’s surprise 50-basis-point move boosts 2-year bonds
  • Currency falls on potential pivot and Fed divergence
Bloomberg business news
The Bank of Canada unexpectedly slowed its pace of interest-rate hikes as the nation’s economy flirts with recession. Rates are rising by 50 basis points to 3.75%, less than the 75-basis-point hike that was expected. Warren Lovely, chief rates strategist at the National Bank of Canada and Diana Avigdor, Barometer Capital Management head of trading, speak on BNN Bloomberg.Source: Bloomberg
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The Bank of Canada unexpectedly slowed its pace of interest-rate hikes as the nation’s economy flirts with recession, although sustained inflation meant it still expects to raise borrowing costs again.

Policymakers led by Governor Tiff Macklem hiked the benchmark overnight lending rate by 50 basis points to 3.75% on Wednesday, less than the 75-basis-point move expected by markets and most economists. The central bank increased rates by three-quarters of a percentage point last month, and by a full percentage point in July.