Chart 4: Inflationary pressures remain broad-based Share of CPI components that are growing % 80  60  40  20  0 2015  2016  2017  2018  Above 3% Sources: Statistics Canada and Bank of Canada calculations  2019 Above 5%  2020  2021  2022  Above 7% Last observation: August 2022  Simply put, domestic inflationary pressures have yet to ease.
That doesn’t mean higher interest rates are not working, but it will take time. By raising interest rates, we are making it more expensive for households and businesses to borrow and therefore to spend. In five steps since March, we have raised the overnight policy rate from 0.25% to 3.25%—one of the steepest and fastest tightening cycles we’ve ever conducted.