As expected, the Bank of Canada has raised its key lending rate by 50 basis points, bringing it to 1.50%.
In its statement accompanying the decision, the Bank said, “the risk of elevated inflation becoming entrenched has risen” and that it is “prepared to act more forcefully if needed” to achieve its 2% inflation target.
What happens now?
In the coming days, banks and other financial institutions are expected to follow the Bank of Canada’s lead and hike their prime lending rate, which is used to price variable-rate mortgages and personal and home equity lines of credit (HELOC).
If you have a fixed-rate mortgage, you will see no change to your rates.
We will continue to monitor developments. Please give First Avenue Financial a call if you’re concerned about the impact rising rates may have on your financial situation so we can discuss your options!