Bank of Canada Raises Rate by 25 bps


The Bank of Canada raised its key lending rate by 25 basis points this morning, bringing it to 4.50%.

This is the eighth consecutive rate increase from the Bank of Canada, which has now increased the overnight target rate by 425 bps since March. However, there are expectations it could be among its last for this tightening cycle.

In its statement, the Bank said that depending on economic developments, “Governing Council expects to hold the policy rate at its current level while it assesses the impact of the cumulative interest rate increases.”

However, it added it’s also “prepared to increase the policy rate further if needed to return inflation to the 2% target.”

What happens now?

In the coming days, banks and other financial institutions are expected to follow the Bank of Canada’s lead and hike their prime lending rate, which is used to price variable-rate mortgages and personal and home equity lines of credit (HELOCs).

This announcement will have no impact on fixed-rate mortgage holders.

If you have any concerns about this rise in borrowing costs, I encourage you to reach out so we can discuss your personal situation and options. 

Read the Bank of Canada’s full statement here