Bank of Canada raises key rate again
This is the largest single rate increase since 1998.
On July 13, the Bank of Canada raised its benchmark interest rate from 1.5 percent to 2.5 percent. Economists had expected the bank to raise the rate by three-quarters of a percentage point, but decided to fight inflation more aggressively.
Inflation in Canada has already reached 7.7%. Prices haven't risen this much since 1983: In May 2022 alone, prices rose by an average of 1.4%. Inflation is higher in many countries now, but for Canadians, the rise in the cost of basic food is quite tangible.
Prices for real estate itself should not rise, experts say, but taking a mortgage loan will become more difficult. Banks must be sure that borrowers will be able to pay the full amount. With a key rate of 2.5%, a person will be expected to be able to pay 6 or 7% of the loan amount each month, otherwise it will not be approved.