Bank of Canada raises key interest rate
Posted: 6/3/2010 |
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For the first time in nearly three years, Canada's central bank has begun increasing its key lending rate from historic lows, even as the country's stronger-than-expected economic rebound is being overshadowed by an "uneven" global recovery and the European debt crisis.
The Bank of Canada on Tuesday raised its overnight target rate a quarter-point to 0.5 percent.
Although concerns about Europe and other matters may delay further moves by the Bank of Canada to raise borrowing costs, all of Canada’s major banks have already raised their prime lending rates 25 basis points to 2.5 percent. The prime rate is generally the base interest rate from which other rates for lending are derived, such as for mortgages, loans or credit cards.
The rate changes made by Canada's major banks are generally made in close concert with each other and with the Bank of Canada. Though the Bank of Canada delivered its widely expected interest-rate increase Tuesday, it was accompanied by a cautious statement that suggested the hike was a reluctant one at best.
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