A few days ago, the Bank of Canada raised their interest rate for the first time in seven years. Their new interest rate is 0.75 percent. The Bank of Canada’s previous interest rate before the hike was 0.50 percent. Interest rates hiked by a quarter.
After the Bank of Canada raised their interest rate, the prices of the Canadian dollar went up as well. The price of the Canadian dollar was up by $0.76 from the average on July 11, 2017.
The rising interest rates didn’t come as a shock to most people. The interest rate hike was expected after senior Bank of Canada officials discussed in speeches and interviews that lower interest rates had done their jobs and that the Canadian economy was doing well.
Bank of Canada governor Stephen Poloz acknowledged that the bank raised their interest rates despite inflation being lower than its target of two percent. He says that the bank thinks that the weakness in inflation is only temporary.
There are more disadvantages compared to advantages when banks raise their interest rates. Not everyone understands what it means, but it’s important to know.
People usually think about mortgages and saving accounts when they hear that interest rates are rising, but mortgages and saving accounts aren’t the only things impacted. Mortgages and saving accounts are the main things that impact the general public.
Individuals can easily compare changes in them by using websites and mortgage calculators to see how it impacts them.
Higher interest rates negatively impact homeowners, business owners, loan takers, the government, the stock market and the economy.