Bank of Canada Raises Interest Rate

Wednesday, 2 March 2022 11:02

By Linda Morgan

Bank of Canada raises interest rate from 0.25 percent to 0.5 percent

For the first time since 2018, the Bank of Canada has raised its key interest rate.

The rate now sits at 0.5 percent, which is up from 0.25 percent.

The Bank of Canada lowered the interest rate to 0.25 percent in March 2020 to help the economy battle the pandemic.

The central bank is expected to implement several small hikes in interest rates this year to try to keep inflation down.

The rate set by the Bank of Canada impacts the rates Canadians get from their banks for mortgages, savings accounts and lines of credit.

The increase is expected to result in banks increasing their prime lending rates, thus increasing the cost of loans.

In response, both RBC and TD Bank say they are increasing their prime rates from 2.45 percent to 2.70 percent.

The change won't directly affect fixed-rate mortgages, but will increase the cost of loans such as variable-rate mortgages.

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