Published: Thu, July 12, 2018
Business | By Tara Barton

Bank of Canada Hikes Interest Rate to 1.50%, CAD Climbs in Response

Bank of Canada Hikes Interest Rate to 1.50%, CAD Climbs in Response

Looking ahead, the bank says it expects higher interest rates will be necessary over time to keep inflation near its target, however, it intends to continue along a gradual, data-dependent approach.

The rate hike was the central bank's first interest rate move in six months and lifted the trend-setting rate to 1.5%, up from 1.25%. -Canada trade dispute would figure prominently in the bank's decision-making process for today's rate announcement.

Scott Hannah says higher interest rates have also helped to cool down the country's real estate markets, helping future homeowners.

As in April, the projection incorporates an estimate of the impact of trade uncertainty on Canadian investment and exports.

Governor Stephen Poloz said trade tensions were the biggest issue on the table.

Israel Shuts Vital Crossing, But Gazans Will Not 'Die in Silence'
Members of the Hamas terror arm, Ezzedeen Al-Qassam Brigades, in Deir Al Balah refugee camp, central Gaza Strip, May 6, 2018. By which Hamas means Israel must not slap the dog that bites its hand. "I am not detailing them".

The Royal Bank of Canada said Wednesday it will increase its prime rate by a quarter of a percentage point to 3.70 per cent, effective Thursday.

Money markets see a almost 70 per cent chance of further Bank of Canada tightening by December. Overall, the Bank still expects average growth of close to 2 per cent over 2018-2020.

USA tariffs on the auto sector's integrated cross-border supply chains would have "large impacts on investment and employment", the Bank of Canada warned Wednesday in its accompanying monetary policy report.

"I thought this was about as neutral a statement as you possibly can put into the marketplace given that you have hiked rates.We're pretty much in uncharted territory in the sense of we've never been this indebted, rates have never really been this low, and [Poloz] is trying to reverse the ship without turning the ship over". Temporary factors are causing volatility in quarterly growth rates: the Bank projects a pick-up to 2.8 per cent in the second quarter and a moderation to 1.5 per cent in the third.

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