Mortgage costs for many Canadians
went up for the third time this year, with the Bank of Canada hiking its target
for the overnight rate by a quarter point to 1 per cent..
The bank rate is now 1.25 per cent
and the deposit rate 0.75 per cent, the bank said in a statement. Echoing
comments made in previous rate hike announcements, the central bank said any
further increases will need to be considered carefully in light of the “unusual
uncertainty surrounding the outlook.”
Canada’s economy has cooled rapidly
in recent months, leaving economists split as to whether Bank of Canada
governor Mark Carney would up borrowing costs this time around. Most now expect
him to pause in the tightening cycle until the economic recovery, particularly
south of the border, gets on a firmer footing.
The bank said the Canadian economy
was softer in the second quarter than it had expected. However, business
investment and consumer demand were in line with its forecasts.
Going forward, the bank said it
expects business investment to rise strongly and consumer demand to be solid.
The weak spot in the outlook for
Canada is the U.S. economy, home to three quarters of Canada’s exports.
“In the United
States, the recovery in private demand is being held back by high unemployment
and recent indicators suggest a more muted recovery in the near term,” the bank