Bank of Canada Raises Interest Rates to 1.5%, Signaling More Hikes on the Way

Major Changes Take Effect as Bank of Canada Keeps Rates at 0.5%

The Bank of Canada has raised its benchmark interest rate to 1.5%, marking the first increase in over two years. The move comes as inflation continues to rise, and the central bank signals that more hikes are on the way.

Deputy Governor Carolyn Rogers Looks on as Bank of Canada Governor Tiff Macklem Makes Announcement

"The economy is growing, and inflation is too high," said Bank of Canada Governor Tiff Macklem. "We are raising interest rates today to bring inflation back to our target of 2%. This will also help to cool the housing market and reduce household debt."

The Bank of Canada's decision is in line with expectations from economists. The central bank has been under pressure to raise rates as inflation has accelerated in recent months. The consumer price index rose by 5.1% in January, the highest level since 1991.

The Bank of Canada's rate hike is likely to have a ripple effect on the economy. Higher interest rates will make it more expensive for businesses to borrow money, which could slow down economic growth. However, higher rates will also make it more attractive for investors to hold Canadian dollars, which could support the currency.

The Bank of Canada's next rate decision is scheduled for April 13. The central bank is expected to continue raising rates in the coming months as inflation remains a concern.