The prime rate at Canada’s six largest banks rose in lockstep after the Bank of Canada’s latest rate hike on Wednesday, further tightening access to credit and the cost of borrowing for Canadians.
RBC, TD Bank, BMO, Scotiabank, CIBC and National Bank all raised their prime lending rate to 7.2 per cent as of Thursday.
That’s up 25 basis points, following a rate hike of the same magnitude from the Bank of Canada, which raised its target for the overnight rate to a 22-year-high of 5.0 per cent on Wednesday.
The central bank’s policy rate sets borrowing rates for other lending institutions, which feeds into terms for Canadian consumer loans like mortgages.
Bank of Canada governor Tiff Macklem said Wednesday that the central bank’s policymakers will be taking each upcoming decision on a meeting-by-meeting basis amid concerns the decline in inflation “could stall” on the way back down to its target of two per cent.
The central bank’s key rate has risen a cumulative 4.75 percentage points since the rate hiking cycle began in March 2022.
Canadians have expressed concerns about how the rising cost of borrowing is affecting their ability to make ends meet, with a recent Ipsos poll conducted exclusively for Global News showing seven in 10 Canadians are worried interest rates will rise faster than they can keep up.
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