Today the Bank of Canada announce they are increasing its trendsetting interest rate by .50% bringing the overnight rate to 1½%.  This is the second consistent oversized increase and third overall for the year so far.

It quoted “Inflation globally and in Canada continues to rise, largely driven by higher prices for energy and food. In Canada, CPI inflation reached 6.8% for the month of April – well above the Bank’s forecast – and will likely move even higher in the near term before beginning to ease.”  This will lead to more increases throughout the year.

Leading up to today’s announcement we’ve heard many forecasts concerning the outcome for the remainder of the year.

Taylor Schleich, National Bank of Canada – with the upside to inflation ‘the Bank is in no position to ditch its hawkish stance and we don’t expect any push back against a third 50 basis point rate hike in July. We do, however, expect the statement’s rate guidance to remain vague and flexible, simply reiterating that ‘interest rates will need to rise further.’

Derek Holt, Scotiabank: “With both growth and inflation tracking above forecasts…it may drive a further sense of concern at the Bank of Canada toward expediting rate hikes,”

What this means for you.

If you have a fixed rate this announcement does not affect your rate.

If you have an adjustable rate, variable rate, HELOC or personal line of credit your monthly payment will increase accordingly.  If you have any questions that we can help with, give us a call!

The next scheduled date for announcing the overnight rate target is July 13, 2022. To read the full article

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