Understanding Canadian Interest Rates and Their Impact on Your Finances
As a resident of Canada, you may have noticed that interest rates have been a hot topic lately. That’s because the Bank of Canada, which sets the benchmark interest rate for the country, has made several changes in recent months. These changes have a direct impact on your finances, from your mortgage and credit card balances to your savings and investments.
In its effort to balance economic growth and inflation, the Bank of Canada has steadily increased its benchmark interest rate from 0.50% in July 2017 to 1.75% in October 2018. This means that borrowing money has become more expensive, as banks and other lending institutions must pay a higher interest rate to borrow from the central bank. As a result, you may see an increase in the interest rates for your loans and credit card balances, which can add up over time.
On the flip side, rising interest rates can benefit your savings and investments. Banks and other financial institutions are likely to pass on the increased interest rates to their customers, which means you can earn more on your savings and investments. However, it’s important to keep an eye on inflation, as rising prices can offset the benefits of higher interest rates.
It’s also worth noting that the Bank of Canada’s interest rate decisions are not set in stone. The bank regularly reviews and adjusts the rate based