BANK OF CANADA RAISES KEY RATE THIRD TIME SINCE SUMMER

Jan 17, 2018

By Bob Komsic

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As expected, the Bank of Canada has raised its key rate after recent economic numbers showed gross domestic product rising, a healthy jobs market and cost-of-living rising higher.
The central bank’s new rate is 0.25% higher at 1.25% – the highest it’s been since 2009.
The Bank of Canada decision impacts rates Canadians get from their banks for mortgages, savings accounts and GICs.
It means you can expect to pay more while earning less on savings.
After the central bank’s announcement this morning, the Royal Bank hiked its prime lending rate also by 0.25% to 3.45%.
The other major banks are expected to follow RBC’s lead.
Gazing into its crystal ball, the central bank expects the economy to expand by 2.2% this year and 1.6% next.
Previously it was anticipating growth of 2.1% in 2018 and 1.5% in 2019.
The renegotiation of NAFTA is a cause for concern about future growth.
The Bank of Canada says it’ll also likely need to raise its benchmark rate even higher over time so as to ensure inflation does not get out of control.
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