Skyline of the financial district

Canada’s largest banks are increasing their prime interest rates by 25 basis points, following the Bank of Canada’s rate hike on Wednesday.

The central bank raised its overnight interest rate by a quarter point to 5.0% as it attempts to tame stubbornly high inflation.

TD, RBC, BMO, and CIBC all responded by raising their prime rates to 7.2% from 6.95% effective July 13. Other banks are expected to follow, making loans such as variable-rate mortgages more expensive.

The Bank of Canada says the rate hike was prompted by elevated demand in the economy driven by strong consumer spending, as well as signs that prices continue to rise rapidly.