The Bank of Canada raised its benchmark interest rate by 25bps to 1.75 percent on October 24th 2018 from 1.5 percent, as widely expected. It marks the third increase this year and the highest rate since December 2008. Policymakers said that more hikes will be needed to keep inflation close to the target of 2 percent, as economy stays strong and the new US-Mexico-Canada Agreement (USMCA) would reduce economic uncertainty. The bank also mentioned evidence that Canadian households are adjusting well to higher borrowing costs. The Bank Rate is correspondingly 2.0 percent and the deposit rate is 1.50 percent. Interest Rate in Canada averaged 5.89 percent from 1990 until 2018, reaching an all time high of 16 percent in February of 1991 and a record low of 0.25 percent in April of 2009.

Canada Interest Rate
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Canada Lifts Key Rate to 1.75%


The Bank of Canada raised its benchmark interest rate by 25bps to 1.75 percent on October 24th 2018 from 1.5 percent, as widely expected. It marks the third increase this year and the highest rate since December 2008. Policymakers said that more hikes will be needed to keep inflation close to the target of 2 percent, as economy stays strong and the new US-Mexico-Canada Agreement (USMCA) would reduce economic uncertainty. The bank also mentioned evidence that Canadian households are adjusting well to higher borrowing costs. The Bank Rate is correspondingly 2.0 percent and the deposit rate is 1.50 percent.

Statement by the Bank of Canada:

The global economic outlook remains solid. The US economy is especially robust and is expected to moderate over the projection horizon, as forecast in the Bank’s July Monetary Policy Report (MPR). The new US-Mexico-Canada Agreement (USMCA) will reduce trade policy uncertainty in North America, which has been an important curb on business confidence and investment. However, trade conflict, particularly between the United States and China, is weighing on global growth and commodity prices. Financial market volatility has resurfaced and some emerging markets are under stress but, overall, global financial conditions remain accommodative.

The Canadian economy continues to operate close to its potential and the composition of growth is more balanced. Despite some quarterly fluctuations, growth is expected to average about 2 per cent over the second half of 2018. Real GDP is projected to grow by 2.1 per cent this year and next before slowing to 1.9 per cent in 2020.

The projections for business investment and exports have been revised up, reflecting the USMCA and the recently-approved liquid natural gas project in British Columbia. Still, investment and exports will be dampened by the recent decline in commodity prices, as well as ongoing competitiveness challenges and limited transportation capacity. The Bank will be monitoring the extent to which the USMCA leads to more confidence and business investment in Canada.

Household spending is expected to continue growing at a healthy pace, underpinned by solid employment income growth. Households are adjusting their spending as expected in response to higher interest rates and housing market policies. In this context, household credit growth continues to moderate and housing activity across Canada is stabilizing. As a result, household vulnerabilities are edging lower in a number of respects, although they remain elevated.  

CPI inflation dropped to 2.2 per cent in September, in large part because the summer spike in airfares was reversed. Other temporary factors pushing up inflation, such as past increases in gasoline prices and minimum wages, should fade in early 2019. Inflation is then expected to remain close to the 2 per cent target through the end of 2020. The Bank’s core measures of inflation all remain around 2 per cent, consistent with an economy that is operating at capacity. Wage growth remains moderate, although it is projected to pick up in the coming quarters, consistent with the Bank’s latest Business Outlook Survey.

Given all of these factors, Governing Council agrees that the policy interest rate will need to rise to a neutral stance to achieve the inflation target. In determining the appropriate pace of rate increases, Governing Council will continue to take into account how the economy is adjusting to higher interest rates, given the elevated level of household debt. In addition, we will pay close attention to global trade policy developments and their implications for the inflation outlook.   


BoC | Luisa Carvalho | luisa.carvalho@tradingeconomics.com
10/24/2018 3:43:45 PM



Calendar GMT Actual Previous Consensus TEForecast
2018-07-11 02:00 PM BoC Interest Rate Decision 1.5% 1.25% 1.5% 1.5%
2018-09-05 02:00 PM BoC Interest Rate Decision 1.5% 1.5% 1.5% 1.5%
2018-10-24 02:00 PM BoC Interest Rate Decision 1.75% 1.5% 1.75% 1.75%
2018-11-20 05:00 PM BoC Wilkins Speech
2018-12-05 03:00 PM BoC Interest Rate Decision 1.75% 1.75%


Canada Money Last Previous Highest Lowest Unit
Interest Rate 1.75 1.50 16.00 0.25 percent [+]
Interbank Rate 2.22 2.21 8.95 0.43 percent [+]
Money Supply M0 94210.00 92954.00 94210.00 2214.00 CAD Million [+]
Money Supply M1 992223.00 987004.00 992223.00 30706.00 CAD Million [+]
Money Supply M2 1632627.00 1622646.00 1632627.00 25523.00 CAD Million [+]
Money Supply M3 2366746.00 2352721.00 2377425.00 37982.00 CAD Million [+]
Banks Balance Sheet 5652859.00 5552930.00 5676343.00 10516.00 CAD Million [+]
Central Bank Balance Sheet 114911.00 115921.00 115921.00 2110.00 CAD Million [+]
Foreign Exchange Reserves 82088.00 80683.00 86805.00 1678.00 USD Million [+]
Loans to Private Sector 414713.00 409985.00 414713.00 10904.00 CAD Million [+]
Deposit Interest Rate 0.10 0.10 15.96 0.05 percent [+]
Foreign Stock Investment 2817.00 15293.00 38783.00 -24129.00 CAD Million [+]
Private Debt to GDP 266.61 264.66 266.61 175.61 percent [+]


Canada Interest Rate

In Canada, benchmark interest rate is set by the Bank of Canada's (BoC) Governing Council. The official interest rate is the Overnight Rate. Since 1996 the Bank Rate is set at the upper limit of an operating band for the money market overnight rate. Previously, from March 1980 until February 1996 the Bank Rate was set at 25 basis points above the weekly average tender rate for 3-month Treasury bills. This page provides - Canada Interest Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news. Canada Interest Rate - actual data, historical chart and calendar of releases - was last updated on November of 2018.

Actual Previous Highest Lowest Dates Unit Frequency
1.75 1.50 16.00 0.25 1990 - 2018 percent Daily




Country Last
Argentina 65.04 Nov/18
Turkey 24.00 Oct/18
Mexico 7.75 Oct/18
Russia 7.50 Oct/18
Brazil 6.50 Oct/18
India 6.50 Oct/18
South Africa 6.50 Oct/18
Indonesia 6.00 Nov/18
China 4.35 Oct/18
Saudi Arabia 2.75 Oct/18
United States 2.25 Nov/18
Canada 1.75 Oct/18
Australia 1.50 Nov/18
South Korea 1.50 Oct/18
Singapore 1.45 Oct/18
United Kingdom 0.75 Nov/18
Euro Area 0.00 Oct/18
France 0.00 Oct/18
Germany 0.00 Oct/18
Italy 0.00 Oct/18
Netherlands 0.00 Oct/18
Spain 0.00 Oct/18
Japan -0.10 Oct/18
Switzerland -0.75 Oct/18


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