## Canadian Economic Growth Slows in Fourth Quarter, Banks Raises Rates **Bank of Canada Raises Key Interest Rate by 25 Basis Points** The Bank of Canada raised its key interest rate by 25 basis points today, marking its eighth consecutive rate increase. The move was widely expected by economists, who had been projecting a hike due to persistent inflation in Canada. The new target for the overnight rate is 4.50%. The decision comes as the Canadian economy has slowed in recent months, with gross domestic product (GDP) growing by just 0.1% in the fourth quarter of 2022. This is down from a growth rate of 0.7% in the third quarter. **Slowing Growth, Rising Inflation** The slowdown in economic growth is due to a number of factors, including rising interest rates, supply chain disruptions, and the ongoing COVID-19 pandemic. Despite the slowdown, the economy remains near full employment, with the unemployment rate at 5.0%. However, inflation remains a concern, with the consumer price index (CPI) rising by 6.9% year-over-year in January. The Bank of Canada has been raising interest rates in an effort to bring inflation back to its target of 2%. **Future Rate Hikes Possible** The Bank of Canada has warned that further interest rate hikes may be necessary in the coming months if inflation does not moderate. The bank's next scheduled rate decision is set for March 8th. **Impact on Economy, Consumers** The Bank of Canada's interest rate hike will have a number of impacts on the economy. Higher interest rates make it more expensive for businesses to borrow money, which can slow down investment and growth. Higher interest rates also make it more expensive for consumers to borrow money, which can lead to a decrease in spending. However, higher interest rates can also make it more attractive for investors to save money, which can help to strengthen the Canadian dollar.
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