Bank of Canada raised its benchmark interest rate by quarter percentage point to 1.75%. That’s the highest it’s been in almost a decade, dating back to December 2008.
Known as the target for the overnight rate, the benchmark is what Canada’s big banks charge each other for short-term loans. It filters down to consumers, because it affects the rates the banks offer their customers for things like variable rate mortgages and savings accounts.
In July, the key interest rate rose from 1.25% to 1.5% and now the central bank additionally tighten the monetary policy.
The outlook for the global economy remains sustainable, especially for the United States, says the regulator. The central bank also believes that the new the trade agreement USMCA, which replaced the North American Free Trade Agreement (NAFTA), will reduce uncertainty in US trade policy.
Bank of Canada also drew attention to the growth of the Canadian economy and predicts the gross domestic product of the country this year will grow by 2.1%.
In 2017, Canada’s central bank raised twice its benchmark interest rate in July and September. In January the financial institution raised the interest rate from 1% to 1.25%.
The next meeting of the central bank to determine the benchmark interest rate is on December 5th.