Low angle view of Skyscrapers in downtown Toronto during the day

Canada’s largest banks are increasing their prime interest rate by 100 basis points following the Bank of Canada’s full-point hike.

The central bank said Wednesday that it was raising its overnight interest rate by a full percentage point to 2.5% to guard against the risk that high inflation becomes entrenched.

TD, RBC, BMO, CIBC and Scotiabank responded by raising their prime rates to 4.70% from 3.70% effective July 14. 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 reduce the highest inflation in decades.