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.