OTTAWA — The Bank of Canada is hiking its trend-setting interest rate as the resilient economy hums along and a big source of trade uncertainty is finally out of the way.
The central bank delivered a quarter-point rate increase for the fifth time since the summer of 2017 — and first time since July — to bring the benchmark to 1.75 per cent.
It was the bank’s first rate decision since Canada agreed with the United States and Mexico earlier this month on an updated North American free trade deal.
The bank says in a statement that more hikes will be needed, but this time around it omitted the word “gradual” from its explanation on how it will approach future rate increases — something that could lead some observers to anticipate future increases will come faster than they had previously expected.
But the bank says the pace of the increases will continue to be guided by how well households are digesting the higher interest rates, given their elevated levels of debt.
The bank says households have already made spending adjustments in response to earlier rate hikes and stricter mortgage policies — and credit growth continues to moderate.