The Bank of Canada increased its trend-setting rate from 0.5 percent to 0.75 percent on Wednesday. This means there’s nothing we can do now except wait and see what the next move will be for the central bank.
The increase was the first hike in seven years, but the Bank of Canada may play a waiting game before telegraphing another move.
But it will be no surprise that retail interest rates will immediately be going up across the board, with the banks expected to follow suit in short order, raising the prime rate, consumer loan rates, and variable rate mortgages.
Although inflation has not yet picked up in Canada, which is usually a precondition of higher interest rates, the Bank of Canada feels that will not last long.and the strong economic activity of the first six months of this year will drive inflation higher, giving the Bank cause to raise rates again in October.
The strong economic activity of the first six months of this year will drive inflation higher, giving the Bank cause to raise rates again in October.
Reaction was swift to the hike, particularly in the Canadian dollar, which moved up over 78-cents U.S. after the announcement, the highest it’s been since July of last year.