Bank of Canada Raises Key Interest Rate

BoC Raises Rate by One Percent

Effective July 13, 2022

In a surprise move, the Bank of Canada (BoC) increased its key interest rate by one percent on July 13, 2022. This marks the largest single rate hike by the central bank since 1998.

The decision comes as the BoC grapples with rising inflation. The consumer price index (CPI) rose by 8.1% year-over-year in June, the highest level since 1983. The increase in interest rates is intended to cool inflation by slowing economic growth and reducing consumer spending.

The BoC's rate hike will have a significant impact on Canadians. Variable-rate mortgages will become more expensive, and the cost of borrowing for businesses and consumers will increase. The rate hike is also likely to slow down economic growth in the coming months.

The BoC's decision has been met with mixed reactions. Some economists have welcomed the move, arguing that it is necessary to bring inflation under control. Others have expressed concern that the rate hike will hurt the economy and make it more difficult for Canadians to afford housing and other essential expenses.

The BoC's rate hike is a significant development that will have a major impact on the Canadian economy and its citizens. It remains to be seen how effective the rate hike will be in bringing inflation under control and what the long-term consequences will be.