Bank of Canada says hikes rates by half pct point, the most in 20 Years

The Bank of Canada raised its benchmark interest rate for the most in 20 years, saying that it has added half a percentage point to bring rates to 1 per cent in a bid to rein in inflation.

"The Bank of Canada today increased its target for the overnight rate to 1 per cent, with the Bank Rate at 1.25 per cent and the deposit rate at 1 per cent," the central bank said in a statement. "The Bank is also ending reinvestment and will begin Quantitative Tightening (QT), effective April 25."

Historical data on interest rates showed it was the largest rate increase since 2000.

The interest rate hike will impact Canadian businesses and consumers by influencing what they pay and receive on items such as mortgages and savings accounts.

Like the US Federal Reserve, the Bank of Canada also slashed its benchmark interest rate to just above zero in March of 2020 when the coronavirus pandemic broke out.

While that move helped the Canadian economy weather the pandemic, inflation since then has grown at its highest level in decades, prompting the central bank to start unwinding the low rates and easy money that fueled the price growth.

It is the second time in as many months that the Bank of Canada raised rates, and also its first back-to-back rate hike since 2017. (ANI/Sputnik)

( With inputs from ANI )