Bank of Canada raises interest rates for the second time this year and the Canadian dollar climbs above 82 cents US

September 6th, 2017  |  Personal Finance

Back in July, the Bank of Canada raised interest rates for the first time in 7 years, when they raised the rates from 0.50% to 0.75%. Wednesday morning saw the second rate increase of the year, bringing the rate from July’s 0.75% up a quarter to 1%.

While economists and currency traders have anticipated the bank’s plan to raise interest rates for the second time this year, the hike came quicker than originally planned. The fast tracking of this decision is citied to be thanks in part to data points indicating a heated Canadian economy.

In a report made by Statistics Canada, the first half of 2017 was the strongest the Canadian economy has experienced since 2002.

"Recent economic data have been stronger than expected, supporting the bank's view that growth in Canada is becoming more broadly-based and self-sustaining," the bank said alluding to the growth of the first half of the year. "The level of GDP is now higher than the bank had expected."

In response to the interest hike, the Canadian dollar increased by more than a cent, brining its value to 82 cents US. This increase marks the highest value the loonie has seen since June 2015.