RBC was the first of the Big Five to pass on the central bank’s 25 basis point rise to customers, increasing its rate from 2.70 per cent to 2.95 per cent. It was soon followed by TD, Scotia, CIBC and BMO. The increases all take effect July 13th. National Bank and Laurentian have also announced hiked rates.
The BoC’s decision to increase interest rates to 0.75 per cent was welcomed by the Conference Board of Canada which said:
“Rising interest rates may cause some consternation about the impact on household finances. However, the level of rates remains very low and regulatory actions by governments are likely to have limited sustained effects in tempering household borrowing.”
Craig Alexander, Senior Vice-President and Chief Economist added that higher rates will reduce vulnerability from household indebtedness and real estate price imbalances and called the hike a “positive development.”
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Canada’s banks have moved quickly to increase their base lending rates following the BoC’s decision Wednesday.