Banks move to match BoC interest rate hike

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Canada’s biggest banks have raised their prime lending rates around the same day the country’s central bank moved its benchmark interest rate a quarter percentage point higher.

The Bank of Canada raised its key lending rate by a quarter point to 1.25 per cent Wednesday morning.

Going forward, borrowers will have to prepare for bigger chunks toward their loans, savers on the other hand can expect more money in the bank.

As of Thursday, January 18, all five (RBC, TD, CIBC, BMO and Scotiabank) now have the same prime lending rate of 3.45 per cent. Prior to the Bank of Canada’s move, their rates were all 3.2 per cent.

The central bank was widely expected to raise its rate after data in recent months showed gross domestic product growing, the job market healthy and the cost of living ticking higher.

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The bank’s benchmark rate is now at its highest level since 2009.

Canada’s economy is expected to expand by 2.2 per cent this year and 1.6 per cent in 2019. Previously the bank was anticipating 2.1 and 1.5 per cent growth.

But while broadly positive about the economy’s prospects, the bank cited “uncertainty about the future of NAFTA” as a reason for concern moving forward.

While there has been a muted reaction to the rate hike, there are worries about what happens to NAFTA and its implications on the economy. – CINEWS

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