Bank of Canada Interest Rate Hike - 0.25%

The Bank of Canada has raised the interest rate once more to a new high of 4.5%. This is the highest interest rates have been since 2007.

The Bank of Canada has hiked interest rates 8 consecutive times now. The overnight target rate being 4.5% also implies a prime rate of 6.7%, which has not been seen since 2001.

The Bank of Canada raises interest rates to combat inflation - and it looks like it’s working. Inflation is down to 6.3%, down from its high of 8.1% in June.

Financial analysts state that the Bank of Canada should be looking to pause interest rate hikes as soon as they can. The general consensus is that people are spending less and saving more as they brace for a recession, which would slow inflation as the Bank of Canada wants. However, according to their metrics, we aren’t quite where we need to be yet.

The Bank of Canada has stated that interest rates will not need to be kept at these levels for very long, and should be lowered in the second half of 2023. The general consensus is that by the end of 2024, interest rates should be back down to around 3%.