The Prime rate increased again!
The Bank of Canada (BOC) raised the prime rate by 0.25% today taking the last of the 2015 emergency stimulus out of the system. The rate increase was expected to happen in October, however the economic growth seen over the summer was enough for the BOC to make the move on 6th Sep 2017.
So why is today’s rate increase a good thing? The first reason is it confirms that the economy is finally finding its footing. Some of the key points in the BOC news release shows that the economy is growing in a self sustaining manner, which is important given the NAFTA discussions, Tropical Storms and North Korea.
The second reason is though the economy is growing, inflation is still below the BOC’s 2 percent target. This suggests that we are seeing slow and steady growth which gives the BOC the luxury of monitoring the economy and making calculated adjustments vs. stomping hard on the brakes with several rate increases to cool things off. Judging from todays news release the BOC seems content to sit back for a while before they consider raising rates again.
Bank Of Canada