Canada column for Sunday, Jan. 21/18
THE CANADIAN REPORT
(c) By Jim Fox
The cost of borrowing has gone up again as Canada’s central bank raised its trendsetting interest rate.
The jump by one-quarter percent by the Bank of Canada is the third increase since last summer and the highest rate in nine years.
An impressive increase in economic numbers led the bank to raise the rate but it warned of the potential impact of uncertainties about rewriting the North America Free Trade Agreement.
There’s speculation the bank will increase the rate at least twice more this year but potential negatives about the agreement’s outcome could affect its outlook.
The bank said “some continued monetary policy accommodation will likely be needed” to keep the economy operating close to its full potential.
“We can't just relax and assume that it would be a small shock,” said bank governor Stephen Poloz.
Trade impacts of the deal’s demise might not have such a major impact on Canada but would likely impact the amount of investment in the country.
Canada’s major banks almost immediately raised their prime lending rate by 0.25 percent to 3.45 percent.