The Bank of Canada (BOC) has hiked the interest rate by 25 basis points for the first time since July 2023, after the US Fed hiked its interest rate in September 2026. Rate hikes are typically introduced when the economy is strong to cool demand and control inflation. The current hike comes as energy supply disruptions from the Middle East war spike energy and commodity costs. An interest rate hike helps keep economic growth from running out of control. The key objective of the rate hike is to keep inflation in check so that growth is sustainable. Higher interest rates make debt expensive, pushing individuals to spend wisely instead of splurging. Think of it like teaching your child budgeting.
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