The Bank of Canada announced another rate hike of 50-basis points on Wednesday, October 26th, 2022 at 10:00 AM Eastern Time. In its release, the Bank of Canada cited broad based inflation, supply chain disruptions, and high energy prices due to Russia’s attack on Ukraine as the reason for quantitative tightening. It also stated “the policy interest rate will need to rise further,” with the ongoing demand pressures of the economy. Prior to the announcement, economists had initially predicted this would be a 75-basis point increase (source), making this increase somewhat good news as it came in below expectations. This is the sixth rate increase this year, from 0.25% to 3.75% since March 2022.
The current key interest rate is 3.75%, an increase of 50 basis points (source). The next scheduled date for announcing the overnight rate target is December 7, 2022 at 10:00 AM Eastern Time.
Why are economists expecting another rate increase?
Analysts are expecting another outsized rate increase (source). As Canada heads into winter, the traditional flu season, we expect additional COVID-19 outbreaks, ongoing supply disruptions, and the war in Ukraine to continue to dampen growth. Global inflation remains high, and central banks around the world are tightening monetary policy.
With the cost of living rapidly increasing, this leads to added pressure faced by those with a variable mortgage rate or with their mortgage reaching maturity in the short term.
What are the Bank of Canada policy rate changes (target for the overnight rate history) in 2022?
|Date*||Target (%)||Change (%)|
|Wednesday, October 26, 2022||3.75||+0.50|
|Wednesday, September 7, 2022||3.25||+0.75|
|Wednesday, July 13, 2022||2.50||+1.00|
|Wednesday, June 1, 2022||1.50||+0.50|
|Wednesday, April 13, 2022||1.00||+0.50|
|Wednesday, March 2, 2022||0.50||+0.25|
|Wednesday, January 26, 2022||0.25||No change|
|Wednesday, December 8, 2021||0.25||No change|
When is the next 2022 Bank of Canada rate announcement?
Remaining Bank of Canada interest rate announcements scheduled for 2022:
- Wednesday, December 7, 2022
The Bank of Canada has also shared its 2023 schedule of upcoming interest rate announcements. The confirmed dates are as follows (source):
- Wednesday, January 25, 2023
- Wednesday, March 8, 2023
- Wednesday, April 12, 2023
- Wednesday, June 7, 2023
- Wednesday, July 12, 2023
- Wednesday, September 6, 2023
- Wednesday, October 25, 2023
- Wednesday, December 6, 2023
All interest rate announcements occur at 10:00 AM Eastern Time.
Why does the Bank of Canada increase or decrease interest rates?
Increasing the interest rate is one of the main levers the Bank of Canada has to reduce runaway inflation. In general, when Canadian economic activity is running red-hot, and real estate activity levels are high, making it more costly to borrow money can help rein in consumer spending.
Back in 2020, in the early days of the pandemic, the Bank of Canada decreased rates to close to zero in an effort to stimulate the economy and boost consumer spending. This made borrowing money cheap, and encouraged Canadians to take on more debt (such as getting a mortgage).
To learn more about the impact of the Bank of Canada interest rate announcement for home buyers and homeowners, see below:
- November 2022 Mortgage Rate Outlook (coming soon!)
- October 2022 Mortgage Rate Outlook
- September 2022 Mortgage Rate Outlook
- August 2022 Mortgage Rate Outlook