‘The tide begins to turn,’ as central bank hikes rate for first time in 7 years
OTTAWA — The Bank of Canada hiked its benchmark interest rate Wednesday for the first time in nearly seven years in what may be the beginning of the end of the era of cheap borrowing that has fuelled the hot housing market and record levels of debt.
The central bank raised its key interest rate target to 0.75 per cent from 0.5 per cent, the first increase since September 2010, amid rising confidence the economy has turned the corner and expectations of stronger growth ahead.
“The economy can handle very well this move we have today,” governor Stephen Poloz told a news conference in Ottawa.
He cited the central bank’s “bolstered confidence” in the country’s economic outlook, including brighter prospects for exports and business investment, compared to the beginning of the year.