Bank of Canada hikes key interest rate to 0.5%
The Bank of Canada raised its benchmark interest rate to 0.5 per cent on Wednesday, a move that’s expected to be the first of a series of small rate hikes this year in an attempt to tame inflation that has risen to its highest point in decades.
It’s the first time the bank has raised its rate since 2018.
The Bank of Canada’s rate affects the rates that Canadian consumers get on things like mortgages, lines of credit and savings accounts at their own banks.
While the bank has been telegraphing its plans to raise its rate to fight inflation for a while now, the bank acknowledged in its announcement Wednesday that inflation is heating up even faster than anticipated.
he bank cited news this week that Canada’s economy grew at a 6.7 per cent annual pace in the last quarter of 2021, a figure that the bank described as “very strong.”
“This is stronger than the Bank’s projection and confirms its view that economic slack has been absorbed.”
The bank also cited factors beyond Canada’s borders as reasons for its move.
“Economies are emerging from the impact of the Omicron variant of [coronavirus] more quickly than expected,” the bank said.
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