NEWS

The Bank of Canada announced another rate hike this morning as expected but the hike was beyond what experts were calling. Rather than the expected 75 basis-point increase, Tiff Macklem, Bank of Canada Governor, increased their target rate by 100 basis-points that reset the rate now at 2.50%.

Referring to their Monetary Policy Report, that was also released this morning, the central bank explained that inflation is higher than expected based on their Monetary Policy Report from back in April, 2022 and they now expect inflation to remain around 8% over the next several months.

Global inflation is also higher with the war in Ukraine delivering the biggest impact. Many central banks across the globe are tightening their monetary policy to battle inflation and control growth, so Canada is striving for the same.

Today’s rate increase has been the highest single day increase since 1998 and the new overnight rate, now sitting at 2.5%, is the highest it has been since 2008. This now pushes the Bank Prime Rate to 4.7% and delivering further impact on mortgage rates, especially Variable Rate Mortgages (VRM) as well as Lines of Credit and other lending products being priced directly from prime.

Bank of Canada Media Release

Bank of Canada Monetary Policy Report – July 2022

The next Bank of Canada Rate Announcement is scheduled for September 7, 2022 and the next Monetary Policy Report will be issued on October 26, 2022.

Source: Bank of Canada