Canadian banks raise prime rate to 5.95% after Bank of Canada hike

Royal Bank, CIBC, TD, Laurentian and more raise rate

FINANCIAL POST / CANADIAN PRESS - Canada’s commercial banks began announcing hikes to their prime rateWednesday after the Bank of Canada raised its key interest rate by half a percentage point.

By Wednesday afternoon Royal Bank of Canada, CIBC, TD Canada Trust, Laurentian Bank of Canada, Bank of Nova Scotia, Bank of Montreal, Equitable Bank and HSBC Bank Canada had all announced they were increasing the prime rate by 50 basis points to 5.95 per cent from 5.45 per cent, effective Oct. 27.

The central bank surprised markets by hiking less than expected Wednesday and signalled it was drawing closer to the end of what’s been one of the fastest rate hike cycles in its history.
However, it also made it clear more hikes are to come as inflation stays hot.

“We are getting closer to the end of this tightening phase but we’re not there yet,” Bank of Canada governor Tiff Macklem said during the news conference Wednesday.

Since March, the central bank has raised its key interest rate six consecutive times, bringing it from 0.25 per cent to 3.75 per cent, and Canadian banks’ prime rate has risen too.

Royal Bank, CIBC, TD, Laurentian and more raise rate