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How clients 'can get through the next year in one piece'

The Bank of Canada concluded its frenetic rate-hiking run for 2022 with a 50-basis-point increase, bringing its benchmark policy rate to 4.25%.

In a statement explaining its seventh consecutive increase, the central bank pointed to persistently high and broad-based inflation, as well as stronger-than-expected GDP growth in the third quarter as the economy operated in excess demand.

“Canada’s labour market remains tight, with unemployment near historic lows,” the BoC said. “While commodity exports have been strong, there is growing evidence that tighter monetary policy is restraining domestic demand.”

Before the announcement, Statistics Canada reported that the economy added 10,100 jobs in November – the third straight month of increases in Canadian employment – while the unemployment rate dipped to 5.1% along with a fall in the labour force participation rate.

With prior forecasts split between 25 basis points and 50 basis points, the announcement yesterday landed on the more aggressive end of expectations, says Jordan Damiani, senior wealth advisor at Meridian Credit Union.

“I think [the November employment numbers] tipped the scales toward a 50-basis-point hike this time,” Damiani says. “It’ll definitely put more pressure on Canadian households in the coming months.”

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