Canada’s central bank is holding interest rates at 0.25 per cent, but warns that increases will be coming to combat high inflation.

On Wednesday, the Bank of Canada (BOC) maintained interest rates at their current levels, despite the economy having recovered from the pandemic, including job numbers returning to pre-pandemic levels by the end of last year. In its decision, the bank says global recovery remains uneven and the Omicron variant continues to cause supply chain bottlenecks.

Inflation rose to 4.8 per cent in December for the first time since 1991. The bank argues the causes of high inflation — such as supply chain shortages — are temporary and will ease to three per cent by the end of 2022.

“Interest rates need to increase to control inflation,” Bank of Canada governor Tiff Macklem told reporters in Ottawa on Wednesday.

“Canadians should expect a rising path for interest rates. We are committed to bringing inflation back to target.”…read more.