Bank of Canada pushes up borrowing costs for the first time since 2018

The Bank of Canada raised its policy interest rate Wednesday, pushing up borrowing costs for the first time since 2018 and kicking off a much-anticipated rate hike cycle despite heightened economic uncertainty caused by Russia’s invasion of Ukraine.

The central bank’s governing council voted to increase the key overnight interest rate to 0.5 per cent from 0.25 per cent – the first step in a push to bring runaway inflation back under control.

This puts the bank on the path to normalizing monetary policy after two years of record-low interest rates, held down by the bank to support the Canadian economy through the COVID-19 pandemic.

Bank of Canada Reporter Mark Rendell reports here.

Meanwhile, Real Estate Reporter Rachelle Younglai reports here that the rate-increase decision is not expected to cool the country’s frenzied real estate market, with homebuyers still able to get cheap mortgages to compete for properties.

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