Bank of Canada raises interest rate to 1.75%

Bank of Canada raises interest rate to 1.75% — signals more hikes imminent
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  • The Bank of Canada increased its trend-setting overnight rate by 0.25% to 1.75% on Oct 24, 2018, the 5th hike since July 2017.
  • The bank rate is now above 1.5% for the first time since December 2008 (see Chart below from Trading Economics)
  • The bank also signaled its intention to keep increasing rates to a “neutral stance” of approximately 3% where it is neither stimulating nor suppressing the economy.
  • The imbalance in the household debt-to-income ratio still stands at about 170% ($1.70 of debt for every $1.00 of take-home pay). The bank remained concerned but said the rate increases and tougher mortgage rules will curb off more borrowing.