by Nutan Brown
on Monday, March 21st, 2022 at 1:15pm.
Earlier this month, the Bank of Canada hiked its key interest rate to 0.5% in an effort to “take some steam” out of the economy.
This move is expected to be the first of a series of small rate hikes this year in an attempt to tame inflation that has risen to its highest point in decades.
It's the first time the bank has raised its rate since 2018. Before the pandemic, the bank's rate was 1.75%, before it quickly slashed the rate down to 0.25% to help the economy. Investors think there could be as many as five more small rate hikes before the end of the year.
This hike affects the rates that Canadians get on things like mortgages, lines of credit and savings accounts at their own banks.
The move should help balance out supply and demand in Canada's housing market, which has sky rocketed over the last year..
In response to the Bank of Canada’s interest rate decision, RBC announced that it is raising its prime lending rate to 2.7%, up from 2.45. Other Canadian banks are expected to follow suit.
Despite these rising interest rates, it's expected that Canada's housing market is likely to remain hot.
The Bank of Canada’s next interest rate decision is set for April 13. Stay tuned to find out what they decide and how it will affect the market moving forward.