The central bank is likely to respond to the rising risk of recession by slowing the pace of interest rate hikes. “Economic growth is expected to falter by the end of this year and the first half of next year as the effects of higher interest rates spread through the economy,” the central bank said in a statement. Following the decision, the Canadian dollar initially weakened against all major currencies.

The current increase is the sixth increase this year. At the beginning of the year, the prime interest rate was still at 0.25 percent. Given the continuing risk of inflation, the central bank ruled out the possibility of further hike in interest rates. Inflationary pressure had eased recently. The annual inflation rate fell to 6.9 per cent in September from 7.0 per cent in the previous month. In June, the rate was still 8.1 per cent.

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Ottawa (DPA-AFX)

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