RBC, TD, Scotiabank and CIBC raise prime rate to 3.20% after Bank of Canada hike

Banks Raise Prime Rate to 3.20%

Royal Bank of Canada and TD Bank were among the first big Canadian lenders to announce Wednesday that they were following the Bank of Canada and hiking their prime rates by 50 basis points. Bank of Nova Scotia and Canadian Imperial Bank of Commerce also said they’d raise their prime rates.

The move comes just hours after the central bank raised its key rate by half a percentage point for the first time in 22 years.

The prime rate of the banks will rise from 2.70 per cent to 3.20 per cent starting Thursday, April 14.

The Bank of Canada raised its key rate to 1 per cent from 0.5 per cent.

Bank governor Tiff Macklem said Wednesday even with the rise, rates were still far below the neutral rate, which the bank calculates at somewhere between 2 and 3 per cent.

“If demand responds quickly to higher rates and inflationary pressures moderate, it may be appropriate to pause our tightening,” Macklem said. “On the other hand, we may need to take rates modestly above neutral for a period to bring demand and supply back into balance and inflation back to target.”