Bank of Canada expected to raise its key rate for first time in nearly seven years
OTTAWA — The Bank of Canada is expected to raise its key interest rate target for the first time in nearly seven years on Wednesday following signs the economy is well on the road to recovery after the crash in oil prices.
Low interest rates have helped fuel the housing market in recent years, incentivizing Canadians to pile on record levels of debt — something that the central bank has noted as a significant risk for the economy.
Rates for new fixed-rate mortgages have already started to rise in anticipation. A hike by the Bank of Canada will likely prompt the country’s big banks to raise their prime rates, a move that will increase the cost of loans such as variable rate mortgages and home equity lines of credit.
James Laird, co-founder of interest rate comparison website RateHub, said the carefully crafted language the Bank of Canada uses Wednesday will be key in reading the tea leaves of future rate decisions.