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The Bank of Canada announced on July 13 an increase of 100 basis points to the policy interest rate, which now stands at 2.50%.

Inflation in Canada is higher and more persistent than the Bank expected in its April Monetary Policy Report (MPR), and will likely remain around 8% in the next few months.

Global inflation is higher, reflecting the impact of the Russian invasion of Ukraine, ongoing supply constraints, and strong demand. Many central banks are tightening monetary policy to combat inflation, and the resulting tighter financial conditions are moderating economic growth.

• Click here to consult the press release issued by the Bank of Canada
• Click here to consult the Monetary Policy Report – July 2022
• The next Bank of Canada announcement will be on September 7th, 2022.

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 4.70%*.

In addition, since iA Financial Group also uses this rate to establish policy loans on certain individual life insurance policies, these loans could be affected.

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 to 1.95% on Friday, July 15, 2022. Truly a good alternative for your clients!

* The annual interest rate changes automatically, without notice, whenever the prime rate changes.