For the first time, since just after the pandemic began, the Bank of Canada is raising it’s key interest rate.  The central bank increase is a quarter of a point to half of one per cent (o.5).

The big banks are expected to raise their prime lending rates as well which impacts things like a variable-rate mortgage.

The Bank of Canada raised its key rate in an effort to battle inflation. The BOC says the unprovoked invasion of Ukraine by Russia is a major new source of uncertainty with prices for oil and other commodities having risen sharply which will add to inflation around the world.

The central bank also says price increases have become more pervasive, and measures of core inflation have all risen with poor harvests and higher transportation costs pushing up food prices. The invasion of Ukraine is putting further upward pressure on prices for both energy and food-related commodities. All told, the Bank of Canada expects inflation to be higher in the near term than projected in January.

In January inflation was 5.1 per cent which is particularly notable because it is the first time in more than 30 years that the annual pace of inflation has topped five per cent.