The bank’s interest rate affects Canadian businesses and consumers by affecting the interest rates they pay and receive on things like mortgages, GICs and savings accounts. The bank cut its interest rate to just over zero in March 2020 when the pandemic started. While the move has helped the economy tackle the unprecedented uncertainty of COVID-19 in recent months, inflation has returned to its highest level in decades, pushing the central bank to begin unwinding all that cheap credit. This is the second time in many months that the bank has raised its interest rate higher and therefore Wednesday’s move is both the bank’s first consecutive rate hike since 2017 and the largest single increase since 2000. Economists have been waiting for the move, and with inflation hovering around 6%, they expect more to come, at least until the central bank rate rises to 2% – and possibly more. Bank officials, including Governor Tiff Macklem, will have more to say about the bank’s decision at a press conference in Ottawa, which begins at 11 a.m. Wednesday. More follow.
