Bank of Canada raises overnight lending rate.

The overnight lending rate is the rate at which the major lenders in Canada  lend to each other. This has a great deal to do with what consumers pay for interest on loans and mortgages. The bank of Canada elected to raise the rate from 1.25% to 1.5%. The expectation is that there will be one more increase in 2018. The bank views the Canadian economy as still operating at close to capacity and needs further moderating. The effects of the B20 stress test seem to be settling out and inflation is still an issue in the bank's eyes. If the effects of the US tariffs create a negative impact on the Canadian economy this may stave off further increases in 2018. However, we will likely see the Canadian banks respond to this recent increase by raising rates in the near future.  

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