Bank of Canada raises interest rates major banks follow

The Bank of Canada increased its overnight lending rate by 25 basis points on July 11, bringing it to 1.5%

This is the fourth increase in the Bank l & # 39, last year. In a statement, the Bank said: "The US economy is stronger than expected, reinforcing market expectations of higher key rates and pushing up the US dollar. This is contributing to financial strains in some US economies. In the meantime, oil prices have risen, but the Canadian dollar is lower, reflecting the strength of the US dollar and the concerns over trade measures.The potential for increased trade protectionism is greatest threat to global outlook

"Household spending is dampened by higher interest rates and tighter lending guidelines. Recent data indicate that housing markets are beginning to stabilize after a difficult start to the year in 2018. "

Following the announcement of the Bank, the five largest Canadian banks – Royal , TD, CIBC, BMO and Scotiabank – all have According to Mark Herman, a Mortgage Alliance broker, the increases will have a negative effect on home-based mortgage lending.

"This removes about 2% of the total amount of the mortgage or purchase power," says Herman. "Same thing with the last increase, so that's six per cent and with one or two other increases planned this year, that would be roughly 10 per cent less."

Next scheduled date for the year. announcement of the overnight rate is September 5

In its statement, the Bank adds to the speculation that it could increase the rate on that date

"The Board of Governors expects to that higher interest rates are warranted to keep inflation close to the target and continue to take a gradual approach., guided by incoming data. "