I wrote this in 2010 when the Bank of Canada put Rates Up by 0.25%, but it was 100% too.
Interest Rates Double!!! OMG!! WAAF!!!
Yesterday the Bank of Canada did as I predicted (for the last eight months). They raised their critical overnight rate to 1/2% from 1/4%. This means they effectively doubled the interest rate or increased it by 100%! OMG! Yes, that is the fun of working with tiny numbers. You can make up ridiculous headlines. These can cause folks heart attacks.
Try this catchy idea on for size: Does this mean banks will follow suit and double Mortgage rates? The answer to this question is no. It is a sensationalized headline that you can have fun with. Use it to cause folks to spit their coffee out during your morning coffee break. Quote my blog if you want it to sound like it comes from a genuine authority. I am not an actual authority, but it sounds better when you back up your outlandish statement with, I heard the Big Cajun Man predicted this.
A fascinating cautionary comment at the end of the Bank of Canada's announcement:
This decision still leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in light of the significant excess supply in Canada, the strength of domestic spending, and the uneven global recovery.
Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments.
Does this mean this might be the only increase for a while? It depends on how the markets react to the change. Inflation might drop if Gas prices drop again.
What will the banks do now? I think they have already "built-in" this increase into their long-term Mortgage rates. They may take advantage of this and increase it a bit more for extra profit. RBC and TD did yesterday, too (sorry).
📈 Bank of Canada Overnight Interest Rate (2005–2025)
🔍 Key Highlights:
- 2005–2007: Rates hovered around 2.75% to 4.50%, reflecting a stable economic period.
- 2008–2009: In response to the global financial crisis, the Bank of Canada slashed rates to a historic low of 0.25%.
- 2010–2018: Gradual increases brought rates up to 1.75% by late 2018.
- 2020: The COVID-19 pandemic prompted a rapid reduction back to 0.25% to support the economy.
- 2022–2023: To combat rising inflation, rates were increased sharply, reaching 5.00% by mid-2023.
- 2024–2025: As inflation pressures eased, the Bank began lowering rates, settling at 2.75% by April 2025.
For a detailed breakdown and the most recent data, you can visit the Bank of Canada's official Interest Rates page.
2010 Interest Rate Articles
- Interest Rates Going Nowhere For January 2010
- Bank of Canada: No Rate Hikes (March 2010)
- Interest Rates, What Did I tell You? April 2010
- June 2010 When Interest Rates Doubled or Rates Up 100%!
- Interest Rates Sky Rocket September 2010
- October 2010 Rates remained the same.
- December 2010 Money is still too loose
- January 2011 No Rate Change but Promises of BIG changes Coming
OMG, you made me look! 🙂
Any predictions for the real estate sector over the next six months?
My prediction is that the housing sector will remain occupied…
I would be very surprised if the major banks did not follow this with an increase in their lending rates. IMO, they’ll use any excuse to increase their profits.