The Bank of Canada has announced an increase to its benchmark interest rate of 50 basis points to 3.75 per cent.

This is the sixth rate hike since March, and is aimed at reducing inflation back to its 2 per cent target.

The rate is officially known as the target for the overnight rate, and it is the amount that retail banks are charged for short-term loans. This rate influences the rates Canadians get from lenders on things like mortgages and savings accounts.

The Bank of Canada is also predicting a potential recession in the first half of next year. According to its latest Monetary Policy Report, the country could see multiple quarters with growth slightly below zero in 2023.