Bank of Canada Announces Target Overnight Lending Rate Increase of 0.25%

Alyssa Furtado
by Alyssa Furtado July 20, 2010 / 1 Comment

This morning at 9:00 a.m. EST, the Bank of Canada announced it would be increasing it’s target overnight lending rate by 0.25% to 0.75%. Forecasters expect the rates to continue to increase going forward reaching somewhere between

“0.75% and 1.5% by December 2010 and between 1.5% and 3.5% by the end of 2011.” [1]

Changes to the target overnight lending rate directly influence the prime lending rate and therefore variable mortgage rates. Today`s announcement will likely take the prime lending rate from 2.50% to 2.75% by tomorrow. When the prime lending rate starts to increase many people are pushed towards fixed mortgage rates which offer a constant interest rate over the term of the mortgage. This is true for homeowners who are currently deciding between a variable and fixed mortgage, but also for homeowners in variable rate mortgages who have the option to convert to a fixed rate.

Accompanying the interest rate increase was a statement by the Bank of Canada : In summary, “The decision leaves considerable monetary stimulus in place, consistent with achieving the 2% inflation target”.[2]

The Bank of Canada will make its next scheduled interest rate announcement on September 8th, 2010.

[1] http://www.businessweek.com/news/2010-07-20/carney-may-raise-canada-lending-rate-signal-slower-tightening.html

[2] http://www.bankofcanada.ca/en/fixed-dates/2010/rate_200710.html


  • Jeff Trounsell, BA, AMP says:

    Wonderful news that our economy is slowly recovering … too bad as these low interest rates make it so much easier for home buyers to get into the market!!!

    Jeff Trounsell, BA, AMP
    Mortgage Broker
    CENTUM Pacific Mortgages Inc.
    Cell: 778-960-1123
    Web: http://www.jefftrounsell.com