The Bank of Canada went ahead and raised the key interest rate by one-quarter of a percentage point today. Although the Canadian economic recovery has been both up an down to this point, Canada’s central bank says that improved spending by the both the corporate sector and the Average Joe was enough to justify a hike of the key lending rate to 1% from just 0.25% three months ago.
“Going forward, consumption growth is expected to remain solid and business investment to rise strongly,” the bank said in a news release.
As the European banking system crumbles and the American economy continues to struggle, the news that Canada’s economic recovery is strong enough to justify an increase to Prime might actually be something to celebrate. Due to the hike in the key lending rate, the Prime rate has now increased from 2.75% to 3% and in the grand scheme of things, that is still terrific for a borrower that currently has or is considering a variable rate.
However, before you go on ahead with your all night Rate Hike kegger parties, be sure to inform your guests that some experts believe this will be the last rate hike for the next 6 months as they expect the BoC will sit the next few dances out to assess how things are going across the border and abroad.
Infact, some naysayers are making the point that because the Canadian and American economies are so intertwined, it’s impossible to actually call any progress we may be making legitimate if the Americans aren’t making any. They feel the recent hike is just a play to the public to create a false sense of forward movement. It’s an interesting point to consider but being a glass half full kinda gal, I’ll take my rate hikes as with a spoon full of sugar, thanks very much. The Gross Domestic Product numbers, although a little soft, were definitely up and many experts believe this reinforces the Bank of Canada’s motivating factor for the rate hike.
So, party on, dude.
If you’re in the Edmonton or Calgary area and you have any questions about interest rates, please contact one of our Mortgage Brokers today.