Bank of Canada Raises Interest Rates

As predicted, the Bank of Canada raised its target interest rate by a quarter point to 1.25% today. The Bank cited a positive business outlook, recent strong jobs reports, inflation at or near the 2% target, and forecast economic growth of 2.2% in 2018 as reasons for the rate hike.  The announcement reports that uncertainty over the future of NAFTA has been priced into the economic growth forecast, so the Bank has not felt that any interest rate action regarding the potential unwinding of the trade pact is necessary at this time. Speculation last week that the Bank might hold the rate at 1% in the wake of wide-spread fears of an imminent unilateral US pullout from the NAFTA talks appear to have been unfounded. The Bank also said that interest rates should continue to rise over the longer term, but that it would monitor economic developments to determine what rate action might be necessary. The next scheduled rate announcement is March 7, 2018. You can read the text of the Bank's announcement here.