Jun 07, 2023
By Jane Brown
You will soon be paying more if you have a balance on a line of credit or a variable rate mortgage.
The Bank of Canada raised its key interest rate by a quarter-percentage point Wednesday, marking the first interest rate change since the central bank announced a pause in January.
The rate now sits at 4.75 per cent, the highest it’s been since April 2001.
The Bank of Canada says its governing council determined interest rates are not high enough to re-balance the economy and bring inflation back to the two percent target.
The decision comes after speculation among economists and forecasters that a recent string of strong economic data would push the central bank to raise interest rates again.
The central bank says excess demand in the economy appears to be more persistent than it had anticipated, citing a tight labour market, better-than-expected economic growth in the first quarter as well as “surprisingly strong” consumption growth.
It says it still expects inflation to fall to about 3-percent this summer from the 4.4 per cent April reading, but with core inflation still elevated, its concerns about inflation getting stuck above 2-percent have increased.