Bank of Canada has increased Prime 1/4%, making Prime rate 3.00%.
It could have gone either way but it was felt Canada’s economy was strong enough to warrant another tightening.
The Bank of Canada has therefore raised its overnight rate target to 1%, from just 0.25% three months ago.
To summarize the Bank’s written statement today:
- “…Consumption growth is expected to remain solid and business investment to rise strongly.”
- “The Bank now expects the economic recovery in Canada to be slightly more gradual than it had projected…”
- “…Financial conditions in Canada have tightened modestly but remain exceptionally stimulative.”
- “Any further reduction in monetary policy stimulus would need to be carefully considered in light of the unusual uncertainty surrounding the outlook.”
As a result of today’s increase, prime rate is 3.00%. It would be the first time prime has seen 3% since February 2009.
If you’ve got a variable payment mortgage, this hike will add about $13 to your monthly payment, for every $100,000 you owe.*
The next Bank of Canada interest rate meeting is October 19.
* Assumes a 25-year amortization, semi-annual compounding, and a prime rate increase of 25 basis points.