Interest rates continue to move up

The Money Reporter regularly surveys insured deposit-taking institutions so you know where to get the best interest rate on insured deposits all across Canada.

InterestRatesThe Bank of Canada started the year off with an interest-rate hike. On January 17, the bank increased its target for the overnight rate by 25 basis points to 1.25 per cent. In explaining its decision, it noted that recent economic data has been strong, inflation is closing on its target, and the economy is operating roughly at capacity.

The bank did, however, sound a note of caution by pointing out the uncertainty with regard to the North American Free Trade Agreement, saying it has clouded the economic outlook.

Overall, though, it pointed out that the global economy has continued to strengthen, and that it now projects growth in the advanced economies to be stronger than in its October policy report. In particular, it drew attention to increasing momentum in the US economy and higher global commodity prices.

The bank, therefore, concluded the economic outlook should warrant higher rates over time. But it also said that continued monetary policy accommodation will probably be needed to ensure the economy operates close to potential and inflation remains on target. It will, therefore, remain cautious in considering future rate hikes.

Nonetheless, the consensus view is there will be two more rate hikes this year.

Where to get the best interest rates in Canada now

Meanwhile, rising rates have filtered through to GICs. The highest rate you can get on a five-year annual GIC is now 3.15 per cent, offered by Oaken Financial. That’s up from 3.00 per cent offered by AcceleRate Financial in our December 15 issue. Implicity Financial offers you 3.10 per cent on a five-year term, up from 2.90 per cent in December. And Outlook Financial also offers you 3.10 per cent on a five-year GIC.

Oaken Financial offers you the best rate on three- (2.85 per cent) and four-year (3.00 per cent) annual GICs, while Implicity pays the top rate on one- (2.45 per cent) and two-year (2.60 per cent) terms. 

This is an edited version of an article that was originally published for subscribers in the February 2, 2018, issue of Money Reporter. You can profit from the award-winning advice subscribers receive regularly in Money Reporter.

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