Bank of Canada Keeps Interest Rate At 1%: What You Need To Know

Rachel Surman

Oct 25, 2017

The Bank of Canada (BoC) kept its trendsetting interest rate at 1% on Wednesday, following two straight hikes in July and . This rate, called the “Overnight Rate,” is what dictates the prime consumer lending rates of Canada’s “Big Five Banks.”

Why did the interest rate stay the same?

While the bank is holding off on increasing the rate, for now, it hinted at possible increases in the future. The bank said in a  it will look at incoming data to assess the impact of higher interest rates, Canada’s economic capacity, wage growth, and inflation.

“While less monetary stimulus will likely be required over time, [the BoC] will be cautious in making future adjustments to the policy rate,” the bank said. 

The bank cites the substantial unknowns around geopolitical developments, and U.S.- related trade policies, such as the renegotiation of the North American Free Trade Agreement, as reasons for caution.

If you’re wondering how this affects you, we’ve got you covered. 

Lending rates will stay the same, for now

When the BoC raises its interest rate, prime lending rates follow – which currently sit at 3.2%. 

Interest rates on personal loans depend on the individual, but borrowing from banks may become more expensive in the future. Consumer debt is also at an all-time-high – Canadians carry, on average, . This is why many consider a  personal loan attractive: your interest rate won’t change.

A less powerful Canadian dollar

The Canadian dollar slumped to a more than three month low, compared to its American counterpart, when the BoC announced it was keeping its rate at 1%.

The Canadian dollar slipped from 78.95 cents US at 9:55 a.m. to 78:38 cents at 10 a.m. and by midday, the dollar has slipped even further, to 78.11 cents.  

What’s next?

The BoC’s next scheduled announcement is set for Dec. 6, 2017. 

Similar Posts

The Ultimate Guide To Credit Scores in Canada 2019

Credit scores can be very confusing and intimidating, and it’s very hard to find reliable information to understand your credit scores. That's why we created this definitive guide.


Sep 25, 2019

Read more

Credit MonitoringCredit cardsLoansMortgagesBankingInvestingInsurance

Borrowell® is a registered trademark of Borrowell Inc. All Rights Reserved. The Equifax credit score is based on Equifax’s proprietary model and may not be the same score used by third parties to determine your credit profile. The score provided to you for educational use is the Equifax Risk Score.

2014-2019 Borrowell® | The Credit Is All Yours!