The Bank of Canada announced Wednesday it would hold its interest rate steady amid surging inflation, but warned a hike is on the horizon.
The central bank dropped its overnight rate drastically at the start of the pandemic to just 0.25 per cent. It had said previously it would keep it at that rock-bottom level until mid-year.
However, Bank of Canada Governor Tiff Macklem says interest rates will eventually need to rise in order to reduce inflation.
Macklem says he expects inflation will remain at five per cent for the first half of 2022, before falling to three per cent by the end of the year.
He cities supply chain constraints and rising food prices as two major drivers of inflation.
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