For the first time in seven years the Bank of Canada raises interest rate

July 11th, 2017  |  Canadian Business

As anticipated, the Bank of Canada has raised its interest rates for the first time since September of 2010. The bank set a 0.25% increase, bringing the rates from 0.50% to 0.75%.

The interest rates that the Bank of Canada set are used as a bench mark for all other banks across the country.

In 2015 the Bank of Canada lowered interest rates twice, landing on the 0.50% that held firm until this morning. It was said in 2015 that the lowering of rates was done to help with the drop in oil prices. Now that oil prices have had time to be adjusted for in the Canadian market, the bank felt it was time to give a bit of an upward nudge to their rates.

“The very strong growth of the first quarter is expected to moderate over the balance of the year, but remain above potential,” the bank said in a statement. “Growth is broadening across industries and regions and therefore becoming more sustainable. As the adjustment to lower oil prices is largely complete, both the goods and services sectors are expanding.”

The Bank of Canada is projecting that this rise in interest rates will have a positive impact on the Canadian economy. They are estimating that growth will now be 2.8% this year, and 2.0% in 2018. This is an improvement from the growth of 2.6%, and 1.9% respectively, that they had predicted back in April.