The Bank of Canada raised its benchmark interest rate Wednesday in an economy that it predicts will remain resilient even as it faces an even bigger bite from deepening trade tensions.
Keeps key interest rate target on hold at 1.25% for now
Most economists expect the central bank to retain its key rate at 1.25%.
Recent trade policy developments have created thickening clouds around the outlook for the Canadian and global economies.
Results further solidify expectations that interest rates will rise for a third time since last summer.
The bank is pointing to several positives, such as encouraging job and wage growth, sturdy business investment and the resilience of consumer spending.
The central bank said it held off this time in part because it expects the recent strength of the Canadian dollar to slow the rise in the pace of inflation.
Meanwhile, Canada's biggest banks are poised to benefit from Wednesday’s surprise interest rate hike.
Analysts widely anticipated a second rate hike in the coming months, but the timing of Wednesday's move came sooner than most had predicted.
Canadian banks hike mortgage rates as attention turns to interest rate’s influence on consumer behaviour
Tarek Mnaimne has been considering dipping his toes into the Canadian real estate market, particularly in Toronto or Montreal, but the rate hike from the central bank is giving him pause.