Date Posted: April 13, 2022
The Bank of Canada today increased its target for the overnight rate to 1%. The Bank is also ending reinvestment and will begin quantitative tightening effective April 25. Maturing Government of Canada bonds on the Bank’s balance sheet will no longer be replaced and, as a result, the size of the balance sheet will decline over time.
The bank's rate impacts Canadian businesses and consumers by influencing the rates they pay and receive on things like mortgages, GICs and savings accounts.
While the move helped the economy to weather the unprecedented uncertainty of COVID-19, in recent months, inflation has come roaring back to its highest level in decades, prompting the central bank to start unwinding all that cheap credit.
The Bank forecasts Canada’s economy will grow by 4¼% this year before slowing to 3¼% in 2023. Economists were expecting the move, and with inflation flirting with six per cent, they expect more to come, at least until the central bank's rate gets up to two per cent — and possibly beyond.
To read the full announcement click here.
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