Canada's inflation rate rose from 3.1 percent in June 2021 to 8.1 percent one year later. What is behind this rapid surge? And will higher interest rates ease the pressure? We explore these questions with a detailed analysis of recently rising inflation. We find a few items dominate, especially...

The Bank of Canada is responding to high inflation by increasing its policy interest rate. With the Bank having recently expanded its balance sheet by buying government bonds and increasing its liabilities to financial institutions, higher policy rates have immediate implications for the Bank of...