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Bank of Canada Interest Rate Increases to 1.5%
Credit Cards, Unsecured Lines of Credit, Mortgage Interest Rates All Affected
The Bank of Canada interest rate has increased again. After the July 11, 2018 announcement, it is up to 1.5%.
This is the first increase since January of 2018, and the fourth since one year ago, in July of 2017.
The Bank of Canada (BOC) has been hinting for months that more interest rate hikes were on the horizon, and this month it came to fruition. The BOC cited numerous reasons for the increase.
- The global economy is expected to grow by about 3.75% in 2018 and 3.5% in 2019.
- The housing market is becoming less crucial to Canada’s economy.
Whereas household spending and the housing market used to make up a bulk of the economic activity, its importance is decreasing. Household spending is curbing with higher interest rates and tighter mortgage lending guidelines.
The BOC cited recent data “suggesting housing markets are beginning to stabilize following a weak start to 2018”
- Exports and business investments are current economy leaders.
- Wage growth is running at an estimated 2.3%.
The BOC acknowledged the current trade uncertainty and tariff impacts with the United States but said the effects on Canadian growth and inflation is “expected to be modest.”
More interest rate increases are expected to come but will take a gradual approach. The BOC will be monitoring incoming data, the impact of higher interest rates, capacity and wage pressures, and trade actions.
According to Bloomberg, investors are anticipating additional hikes every six months or so until the benchmark rate settles around 2 or 2.25% by the end of 2019.
After the announcement, the Canadian dollar climbed 0.3%.
The next BOC announcement is scheduled for September 5, 2018.
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See how we can grow your mortgage business at www.purview.ca or call 1-855-787-8439.
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