This week’s increase is likely to be followed by others
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Analysts were split on the likelihood but the Bank of Canada decided to make 2017’s second interest rate rise Wednesday and there could be more to come.
The increase to 1% was swiftly followed by increases of 25 basis points for Canada’s big banks with RBC moving first with a prime rate of 3.2% followed by the others increasing to the same rate.
While the central bank did not publish detailed commentary on monetary policy – that’s coming October 25 – it did mention the stronger-than-expected GDP and some other economic metrics which have shown a stronger Canadian economy.
“Given the stronger-than-expected economic performance, Governing Council judges that today’s removal of some of the considerable monetary policy stimulus in place is warranted,” the bank said.
TD Economics’ senior economist Brian DePratto, says that within the brief announcement was an indication that the BoC will closely monitor the trajectory of the Canadian dollar.
He also noted that despite slowing but expectation-beating growth for the economy, unless there is a significant shock the “rate increase will be part of a larger and longer march towards interest rate normalization.”
The increase to 1% was swiftly followed by increases of 25 basis points for Canada’s big banks with RBC moving first with a prime rate of 3.2% followed by the others increasing to the same rate.
While the central bank did not publish detailed commentary on monetary policy – that’s coming October 25 – it did mention the stronger-than-expected GDP and some other economic metrics which have shown a stronger Canadian economy.
“Given the stronger-than-expected economic performance, Governing Council judges that today’s removal of some of the considerable monetary policy stimulus in place is warranted,” the bank said.
TD Economics’ senior economist Brian DePratto, says that within the brief announcement was an indication that the BoC will closely monitor the trajectory of the Canadian dollar.
He also noted that despite slowing but expectation-beating growth for the economy, unless there is a significant shock the “rate increase will be part of a larger and longer march towards interest rate normalization.”
