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Bank of Canada Bumps Up Key Interest Rate
Written by Judy McKinnon | Published on July 12, 2017
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The Bank of Canada on Wednesday, July 12 did something it hasn't done in nearly seven years: it hiked its benchmark interest rate.
Canada's central bank raised its target for the overnight rate, or the policy interest rate, to 0.75 per cent from 0.50 per cent. It's the first time since September 2010 the Bank of Canada has increased the rate. (The only changes at all since then were in 2015 when the rate was cut twice.) The latest move was widely expected after recent comments from Bank of Canada Governor Stephen Poloz that the previous cuts had worked as intended, and amid signs of economic strength, including better-than-expected employment numbers for June.
The Bank of Canada attributed the rate hike in part to strong economic growth.
"Canada's economy has been robust, fuelled by household spending," it said in a statement, adding that growth is broadening across industries and regions. The central bank acknowledged recent soft inflation, but said it expects this to be short-term.
"The factors behind soft inflation appear to be mostly temporary, including heightened food price competition, electricity rebates in Ontario, and changes in automobile pricing," the Bank of Canada said.
Find out more in our “What's Up With All The Rate-Hike Talk?" primer from earlier this week.
*This article was updated on July 12 to add specific details about the Bank of Canada's decision in paragraphs 3-5.
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