Bank of Canada just raised rates to 2.5%
The Bank of Canada just raised rates to 2.5%. First hike in three years.
The reason is oil. The war in the Middle East pushed gas prices up, and inflation has sat around 3% since April.
Here’s my problem. A rate hike in Ottawa doesn’t refine one more barrel of oil. It doesn’t change what you pay at the pump. What it does change is the cost of every mortgage renewal and business loan in this country, in an economy already absorbing new U.S. tariffs.
The Bank’s answer is that it isn’t targeting gas prices. It’s trying to stop energy costs from spreading into everything else. That risk is real. I just think hiking into a slowing economy is the wrong trade, and some economists called this premature with core inflation still subdued.
If you have a renewal coming in the next 12 to 18 months, stress-test it now. The Bank says more hikes may be needed.
Hike, hold, or cut. What would you have done?
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Opinion only. Not financial or investment advice.