The Chief Executive Officer for Steinbach Credit Union says we probably have not seen the last of interest rate adjustments for 2022.
On Wednesday, the Bank of Canada raised its interest rates by 25 basis points to .50 per cent. Glenn Friesen, CEO for SCU says like all financial institutions, they followed suit by also raising their lending rates by 25 basis points.
The prime rate for SCU is now 2.7 per cent. Friesen says if you have a $100,000 mortgage, this works out to an increase in interest costs of about $250 per year.
Friesen says their savings rate when up to 1.10.
Friesen says the Bank of Canada increased interest rates in order to slow the economy and maintain inflation between one and three per cent, to keep in line with their mandate. He notes right now the inflation rate is hovering above five per cent in Canada.
According to Friesen, the bond markets are indicating that there will be three or four more adjustments yet in 2022.
"They want to get back to a neutral rate, which is probably where we were before COVID-19," explains Friesen.
He notes when COVID-19 hit, interest rates dropped by 1.5 per cent.
"I can see them going back over the next two years by that 1.5 per cent and that could be considered a neutral rate," he says.
He notes pre-pandemic, the prime rate was 3.95 per cent.
Friesen says interest rates are still historically low making it a great time for borrowers, but not so good for savers and those on a pension.