This morning, the Bank of Canada (BoC) raised its prime lending rate another .25% bringing the rate to 1%, where it will likely stay until 2018.
With Canada’s economy showing strength in the last quarter, it’s no surprise the BoC decided to raise the rate at this time. This is the second increase in two months. July’s increase was the first in seven years.
Payments on variable-rate mortgages and lines of credit are likely to rise immediately.
It will be interesting to watch the impact on the Canadian Dollar. An interest rate increase generally attracts foreign investment and boosts demand for a currency, pushing that currency's value higher.