The Bank of Canada has increased interest rates for the first time in 7 years. As a result, the Canadian economy is in an interesting state.
Governor Stephen Poloz increased the central bank’s key overnight rate from 0.5 to 0.75 percent. Due to this increase, adjustable-rate mortgages and home equity lines of credit were immediately affected.
Economist and officials are saying that this is not the end to the rise in interest rates. In addition, the bank plans to raise the interest rate another 0.25 percent in the fall. As a result, this would increase the central bank’s key overnight rate to 1.0 percent.
The sudden rise in the Bank of Canada’s interest rate is a result of strong growth with the Canadian economy and inflation being below the bank’s 2 percent target. In addition, the bank expects inflation to ease even further due to the Ontario electricity rebate.
On January 1, 2017, Ontario residents were offered the ability to receive a rebate on their electricity bills. The rebate is equal to the provincial portion (8%) of the 13% harmonized sales tax (HST).
As a result, the rebate can amount to $130 a year for a typical homeowner. Consequently, homeowners in rural areas are eligible for larger rebates around $45 a month or $540 a year.
As of July 1, 2017, based on the Ontario’s Fair Hydro Plan, homeowner’s electricity bills were reduced by 25%. In addition to the reduction, electricity rates were stabilized and set to remain below the rate of inflation for the next 4 years.
The 25% reduction includes the 8% rebate offered to homeowners on January 1, 2017.
Homeowners who live in rural or remote communities or have low incomes can expect their bill to be 40% to 50% lower. furthermore, If you have a low income, you can apply online to get credits on your bill for $35 to $75 per month through the Ontario Electricity Support Program.
The Fair Hydro Plan includes as many as half a million small businesses and farms across Ontario.
The strong economic growth in the Canadian economy is not an excuse to build more debt. Economist and officials believe that the recent upturn in the Canadian economy is temporary. Most noteworthy, increasing interest rates, food price competition, and changes in automobile pricing can all affect inflation.
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with the effects of food price competition, electricity rebates in Ontario and changes in automobile pricing expected to fade.