The Bank of Canada announced on April 13 an increase of 0.50% to the policy interest rate, which now stands at 1.00%.
This increase was anticipated by the markets according to our Interim Chief Economist Sébastien Mc Mahon, as there is a strong sense of willingness on the part of central banks to accelerate the pace of monetary policy tightening.
For more information, you can watch Sébastien Mc Mahon's video on the subject.
The next Bank of Canada announcement will be on June 1, 2022.
- Link to the press release issued by the Bank of Canada: https://www.bankofcanada.ca/2022/04/fad-press-release-2022-04-13/
- Link to the Monetary Policy Report – April 2022 (available in PDF): https://static.bankofcanada.ca/uploads/pdf/mpr-2022-04-13.pdf
Impact on savings and life insurance loans
On the savings side, as stipulated in the loan agreement, this increase will automatically impact the payments to be made by your clients with previously issued loans (RRSPs, RESPs and investment loans) as these loans are established according to the Royal Bank of Canada's prime rate which now stands at 3.20%*. In addition, since iA Financial Group also uses this rate to establish policy loans on certain individual life insurance policies, this adjustment could have an effect on these loans.
These adjustments are automatic, no action is required on your part, nor on your client's part.
Increased rate for the High Interest Savings Account (HISA)
On a positive note, the High Interest Savings Account (HISA) rate increases from 0.65% to 1.05% on Friday, April 15, 2022!
* The annual interest rate changes automatically, without notice, whenever the prime rate changes.
