The Bank of Canada has increased its key interest rate to 0.5%.
This is the first time the bank has raised its rate since 2018. It comes as the country experiences inflation at its highest level since 1991.
“As the economy continues to expand and inflation pressures remain elevated, the Governing Council expects interest rates will need to rise further,” said the Bank of Canada in a news release.
— Bank of Canada (@bankofcanada) March 2, 2022
The institution also cites Russia’s invasion of Ukraine as a “major new source of uncertainty” as prices for oil and other commodities have risen.
While the central bank says economic growth in Canada is rebounding after the impact of the Omicron COVID-19 variant, factors like poor harvests and higher transportation costs are still contributing to inflation.
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The Bank of Canada’s rates affect mortgages, lines of credit and savings accounts at Canadian consumers’ banks.