Modern urban skyscrapers in downtown Chicago from below to the blue summer sky. Sun reflecting in the glass facades of the urban futuristic buildings. Chicago, Illinois, USA

Canada’s largest banks are increasing their prime interest rate by 75 basis points following the Bank of Canada’s hike on Wednesday.

The central bank raised its overnight interest rate by three-quarters of a point to 3.25% in an attempt to cool a Canadian economy that continues to operate in “excess demand.”

TD, RBC, BMO, CIBC, Scotiabank and Desjardins responded by raising their prime rates to 5.45% from 4.70% effective Sept. 8. Other banks are expected to follow, making loans such as variable-rate mortgages more expensive.

The Bank of Canada said interest rates will need to rise further to bring inflation down to its 2% target.