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Bank of Canada Hikes Interest Rates to 4.75%

The Bank of Canada raised its key interest rate by 25 basis points to 4.75% on Wednesday, the highest level since 2007. The decision was unanimous, and the bank said it is prepared to raise rates further if necessary to bring inflation under control.

Inflation in Canada has been running at a 30-year high, reaching 6.3% in March. The Bank of Canada has raised rates eight times since March 2022 in an effort to cool the economy and bring inflation down.


The bank's decision to raise rates is likely to have a significant impact on Canadian households and businesses. Higher interest rates will make it more expensive to borrow money, which could lead to slower economic growth and higher unemployment.


However, the bank believes that the benefits of raising rates outweigh the costs. The bank believes that higher rates will help to bring inflation down, which will ultimately benefit Canadians in the long run.


The Bank of Canada will next meet to discuss interest rates on July 13.


Here are some of the potential impacts of the Bank of Canada's interest rate hike:


  • Higher borrowing costs: Higher interest rates will make it more expensive for Canadians to borrow money, which could lead to a slowdown in the housing market and consumer spending.

  • Slower economic growth: The combination of higher interest rates and a slowdown in the housing market could lead to slower economic growth in Canada.

  • Higher unemployment: If economic growth slows, there is a risk that unemployment could rise.


However, the Bank of Canada believes that the benefits of raising rates outweigh the costs. The bank believes that higher rates will help to bring inflation down, which will ultimately benefit Canadians in the long run.


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