Monthly inflation rate and bank rate in Canada 2018-2024
Canada's inflation rate and bank rate have undergone significant changes from January 2018 to July 2024. After reaching a peak of 8.1 percent in June 2022, inflation gradually declined to 2.3 percent by September 2024. This trend mirrors the global economic landscape, where most advanced and emerging economies experienced similar inflationary pressures and subsequent monetary policy responses.
Global context of inflation and interest rates
The Canadian experience aligns with the broader international trend of central banks raising policy rates to combat inflation. Between 2021 and 2023, nearly all advanced and emerging economies increased their central bank rates. However, a shift occurred in the latter half of 2024, with many countries, including Canada, beginning to lower rates. This change suggests a new phase in the global economic cycle and monetary policy approach. Notably, among surveyed countries, Russia maintained the highest interest rate in September 2024, while Japan had the lowest rate.
Comparison with the United States
The United States experienced a similar trajectory in inflation and interest rates. U.S. inflation peaked at 9.1 percent in June 2022, slightly higher than Canada's peak. The Federal Reserve responded with a series of rate hikes, reaching 5.33 percent in August 2023. This rate remained unchanged until September 2024, when the first cut since September 2021 was implemented. In contrast, Canada's bank rate peaked at 5.25 percent and began decreasing earlier, with cuts in June and July 2024. These differences highlight the nuanced approaches of central banks in managing their respective economies amid global inflationary pressures.
