Toronto 
The Bank of Canada has increased the overnight rate by 50 basis points increasing the target rate to 1 per cent.
With inflation in Canada at 5.7%, much above the Bank’s forecast in its January Monetary Policy Report, the Bank has now increased the Bank Rate to 1¼% and the deposit rate to 1%.
Bank of Canada says Russia’s ongoing invasion of Ukraine, price spikes in oil, natural gas and other commodities, supply disruptions resulting from the war exacerbating ongoing supply constraints will continue to keep inflation average of almost 6% in the first half of 2022.
The central bank is expecting that inflation will remain well above the control range of 2 percent throughout this year, then ease to 2½% in the second half of 2023 and return to the 2% target in 2024.
Bank of Canada increased rates by 25 basis points last month.
The rate increase will affect mortgages, lines of credit, monetary loans and savings accounts.
If you had a variable interest rate of 2 per cent for a mortgage of $500,000, the rate will now be 2.50 per cent and the bi-weekly payment will increase by $56.49 to $1,033.35 from $976.86.
Canadians should expect a further increase in the overnight rate as the Bank of Canada in a press release said, “With the economy moving into excess demand and inflation persisting well above target, the Governing Council judges that interest rates will need to rise further.”
“The policy interest rate is the Bank’s primary monetary policy instrument, and quantitative tightening will complement increases in the policy rate. The timing and pace of further increases in the policy rate will be guided by the Bank’s ongoing assessment of the economy and its commitment to achieving the 2% inflation target.”
