After months of speculation, Bank of Canada governor Mark Carney announced an increase in the BoC’s key lending rate this morning, the first increase since 2007. The rate goes from 0.25%, where it’s been fixed since last April, to 0.5%. CBC has put together a useful primer on what we should expect as a result. (In short, we’ll see prime lending rates, variable mortgage rates, and lines of credit rates all heading up.)
The BoC’s decision has been the subject of much debate — recent low interest rates were intended as an economic stimulus coming out of last year’s recession, and some economists have been arguing that rates should stay low for the time being as a measure of protection against global market turmoil. On the other hand, 0.5% isn’t exactly sky-high (the CBC includes a graph of historical rates, reminding us that for brief period in 2000, rates were at 6%.)
The BoC will have another opportunity to adjust its rate in July, and another increase is widely expected.