The Bank of Canada raised its overnight rate from 0.25% to 0.50%. This move marks the first increase since 2018 and shows that rates are going to start modestly inching higher. Borrowing costs will rise to some degree for Canadians, however still remain historically low.
Prior to March 2020, before the pandemic hurt the economy, the overnight rate was sitting at 1.75%. This increase to 0.50% is still very low comparatively. Investor’s are projecting 5 or more small increases to the rate in 2022 as Canada’s economy continues to pick up speed. Historically the Bank of Canada has made increases (and decreases) usually by 0.25% at a time.
The Bank of Canada noted that our economy grew at a higher than projected pace of 6.7%, which is quite strong. Inflation is heating up quicker than predicted. It was also noted that the invasion of Ukraine is a new source of uncertainty that will influence inflation and other parts of the economy. It sounds like we can expect some modest hikes this year.
The BoC’s next policy announcement is scheduled for April 13, 2022, we will update you again then!
If you have any questions about how this may affect you please contact us.
For more information please check the following sources:
Here is a list of dates that the BoC will be making rate announcements this year:
- Wednesday, January 26*
- Wednesday, March 2
- Wednesday, April 13*
- Wednesday, June 1
- Wednesday, July 13*
- Wednesday, September 7
- Wednesday, October 26*
- Wednesday, December 7