Jan 25, 2023
By Jane Brown
As expected, the Bank of Canada is raising its key lending rate by a quarter of a percentage point to 4.25 percent, the highest it has been since 2007.
What’s encouraging for those who have a variable rate mortgage or balance on a line of credit, the central bank is also indicating this is to be the last rate hike of the cycle.
Wednesday’s interest rate increase marks the eighth consecutive rate hike since March of 2022, as the central bank tries to quell decades-high inflation.
The strategy is working, however slowly. Annual inflation was 6.3 percent in December, falling from a high of 9.1 percent in June.
But the central bank says the Canadian economy is still overheated, prompting its governing council to raise interest rates once again.
But if economic developments remain in line with current projections, the central bank says it expects to hold its key interest rate at its current level.
In its quarterly monetary policy report, the Bank of Canada projects growth in the economy will stall through the first half of the year, while inflation will ease to three per cent by mid-2023.