Matishak Financial Services
|Posted on 19 January, 2018 at 1:15|
On January 17, 2018, the Bank of Canada hiked its overnight rate by 25bps to 1.25 percent, which was in line with market expectations. Policymakers said that recent data has been strong, inflation is close to target, and the economy is operating roughly at capacity but noticed that uncertainty surrounding the future of NAFTA is clouding the economic outlook.
Please see below Bank of Canada Interest rate changes over the past 5 years:
Note that the Bank of Canada rate is now the highest it has been in the past 5 years. Major Canadian banks anticipated this increase and increased their prime lending rates in the week leading up to the Bank of Canada announcement. The last time rates were higher was just before the onset of the financial crisis in 2008/9. Uncertainty with NAFTA negotiations, the divergent move in Canadian income tax policy vs our US counterparts and continued pipeline bottlenecks for Canadian oil & gas producers all likely will lead to increased upward pressure on rates as Canada strives to stay competitive with more favorable returns to capital elsewhere.
If you are worried about how the recent changes to interest rates might affect your bottom line, give us a call and we would be happy to review your credit and lending agreements with a view to recommending actions you can take now to protect your business against future increases in interest rates. Call me at 403 618 5870 or email me by pressing the send message button at the bottom of this blog.
Categories: Interest rates