The Bank of Canada has raised its lending rate by.25%. It’s been a move warned of since April. The rate is now at .75%.
It was a move made in response to the economic growth. “Along with stronger-than-expected growth, this has bolstered the Governing Council’s confidence in the outlook for the economy and inflation, Governor Stephen Poloz said.” Inflation is expected to reach their 2% target within the next year.
The increase means Canadians will pay more when taking out a variable rate mortgage, or using a line-of-credit. The Canadian dollar is trading right now at .79 cents US in response.
Chief Economist at RBC Craig Wright believes this could be a return to higher lending rates. “We’re going to see more, moving forward, assuming growth holds up,” he told CBC News.
Canadian economic growth is forecasted to be 2.8% this year, and drop to 2% in 2018. It could drop as low as 1.6% in 2019.