The prime rate at Canada’s six largest banks increased simultaneously following the Bank of Canada’s recent rate hike, leading to a tighter access to credit and higher borrowing costs for Canadians.
RBC, TD Bank, BMO, Scotiabank, CIBC, and National Bank have all raised their prime lending rate to 7.2% as of Thursday.
This increase of 25 basis points follows the Bank of Canada’s rate hike to 5.0%, the highest in 22 years.
The central bank’s policy rate determines borrowing rates for other lending institutions, which in turn affects terms for Canadian consumer loans such as mortgages.
Bank of Canada governor Tiff Macklem stated that policymakers will make upcoming decisions on a meeting-by-meeting basis, expressing concern that the decline in inflation may impede progress towards the target of two percent.
The central bank’s key rate has increased by a cumulative 4.75 percentage points since the rate hiking cycle began in March 2022.
A recent Ipsos poll conducted exclusively for Global News revealed that seven in ten Canadians are concerned about the impact of rising interest rates on their financial stability.
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