As expected, the Bank of Canada has raised its benchmark interest rate to 1.5 per cent.
The bank’s rate, known as the overnight rate, is the interest that retail banks must pay for short term loans, but it affects what that consumers pay to those banks for things like mortgages, lines of credit and savings accounts.
This time the bank has decided to raise its rate by 25 basis points — 0.25 percentage points — to 1.5 per cent. It’s the fourth time the central bank has raised its rate since last summer.
The bank’s next decision on interest rates is expected on Sept. 5.
The central bank tends to cut its rate when it wants to stimulate the economy and raise it when it wants to keep a lid on inflation.
Statistics Canada suggest the economy is expanding, the job market is doing well, and inflation is inching higher, this has been a source of concern for a while now.
In its decision to hike, the bank noted in a statement that the housing market is stabilizing, commodities such as oil are starting to rally, and businesses are starting to spend again, given these facts, it makes sense for the bank to hike its interest rate at this time.
Overall, the bank doesn’t think the impact will be too harsh. -CINEWS