Bank of Canada raises benchmark interest rate to 1.5% For the fourth time in a little over a year, the Bank of Canada has raised its benchmark interest rate, a move that will increase the cost of borrowing for Canadians with variable-rate mortgages and lines of credit. Central bank has raised its rate 4 times since last summer as economy has heated up Pete Evans · CBC News · Posted: Jul 11, 2018 10:00 AM ET | Last Updated: 6 minutes ago The Bank of Canada has decided to raise its benchmark interest rate to 1.5 per cent. The bank's rate, known as the overnight rate, is the interest that retail banks have to pay for short term loans, but it affects what that consumers pay to those banks for things like mortgages, lines of credit and savings accounts. Every six weeks, the bank meets to decide on what its interest rate will be, based on what it sees happening in the economy. This time, the bank has decided to raise its rate by 25 basis points — 0.25 percentage points — to 1.5 per cent. It's the fourth time the central bank has raised its rate since last summer. The bank's next decision on interest rates is expected on Sept. 5. The central bank tends to cut its rate when it wants to stimulate the economy and raise it when it wants to keep a lid on inflation. The Bank of Canada cut rates aggressively during the last two major downturns, and is now in the middle of a slow process of beginning to get rates back to more normal levels. (Camile Gauthier/CBC) The move was exactly what economists who monitor the bank were expecting, as a recent slate of numbers from Statistics Canada suggest the economy is expanding, the job market is doing well, and inflation is inching higher. In its decision to hike, the bank noted in a statement that the housing market is stabilizing, commodities such as oil are starting to rally, and businesses are starting to spend again. From the bank's point of view, those are all good signs for the economy. But the bank also said it is keeping an eye on the ongoing tariff dispute, specifically those on Canadian steel and aluminum. On the whole, the bank doesn't think the impact will be too harsh. "Although there will be difficult adjustments for some industries and their workers, the effect of these measures on Canadian growth and inflation is expected to be modest," the bank said. Bank governor Stephen Poloz will appear alongside deputy governor Carolyn Wilkins at 11:15 a.m. ET on Wednesday morning to talk about why the bank decided to hike, and to discuss the bank's quarterly Monetary Policy Report, which outlines the central bank's overall views on the Canadian economy.