Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Thursday January 18, 2018
Bank of Canada raises key interest rate to 1.25% despite NAFTA worries
The Bank of Canada raised its key lending rate by a quarter percentage point to 1.25 per cent Wednesday, the third time it has moved its benchmark rate from once-record lows last summer.
The bank’s rate has an impact on rates that Canadians get from retail banks for things like mortgages, savings accounts and GICs. The move means borrowers can expect to pay more, but savers can expect to earn more, too.
After the central bank moved in the morning, the Royal Bank of Canada and Toronto-Dominion Bank each hiked their prime lending rates by the same amount, 25 points, in the afternoon. The new rates of 3.45 per cent will be in effect as of Thursday, Jan. 18. Canada’s other big banks are expected to follow suit.
The Bank of Canada was widely expected to raise its key rate after economic data in recent months showed gross domestic product growing, the job market healthy and the cost of living ticking higher.
The bank’s benchmark rate is now at its highest level since 2009.
In the MPR, the bank nudged up its expectations for how the economy will perform this year and next. The bank now expects Canada’s economy to expand by 2.2 per cent this year and 1.6 per cent in 2019. Previously the bank was anticipating 2.1 and 1.5 per cent growth.
But while broadly positive about the economy’s prospects, the bank cited “uncertainty about the future of NAFTA” as a reason for concern moving forward. (Source: CBC)