The Bank of Canada has raised its policy rate by .75%, an increase that was expected as the Bank continues its efforts to bring inflation down to more normal levels. This rate affects the cost of borrowing for various loans, including variable rate mortgages and lines of credit. 

In the Bank’s announcement, it stated that the economy continues to operate in excess demand with a 9.5% growth in consumption and business investment being up by nearly 12%. It expects the economy to moderate in the second half of this year and bring demand more in line with supply. 

The Bank also indicated that the slight decline we saw in Canada’s inflation from 8.1% to 7.6% is due to a drop in gasoline prices. However, excluding gasoline inflation increased. Given the outlook for inflation, the Bank signalled that the policy interest rate may still need to rise further. 

The next Bank of Canada announcement is scheduled for October 26th, 2022.

If you have any questions about the impact of the Bank’s rate hike on your mortgage or your mortgage payments, please reach out to a Mortgage Alliance Professional.