Bank of Canada raises its interest rate to 5%

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The Bank of Canada raised its benchmark interest rate by 25 basis points on Wednesday, marking the first time since April 2001 that the figure hit five per cent. Some of the country's biggest lenders, including the Royal Bank of Canada, CIBC, Bank of Montreal and TD Bank, have already announced that they will match their increase effective Thursday to align with that of the central bank's. Could be mid-2025 before bank hits inflation target Wednesday's rate hike marks the 10th by the central bank since March 2022. During a mid-morning news conference on Wednesday, Bank of Canada governor Tiff Macklem said the bank expects inflation to ease but that it could take until the middle of 2025 to hit its two per cent target. "We've been clear about the indicators we are watching, and it's clearly too early to be talking about interest rate cuts," Macklem said, adding it's also too soon to tell how much impact the rate increases are having. Having started on a fixed mortgage, she switched to a new bank and took on a variable rate about a year-and-a-half ago - before the Bank of Canada began its quest to tame an overheated economy with a series of interest rate hikes. Bonnal questioned why the bank would continue to raise interest rates when inflation is close to its target range - and given that the impact of rate hikes can sometimes take more than a year to appear in the economy.

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