Bank of Canada raises interest rates

The Bank of Canada of Canada has raised its key interest rate to 0.5 per cent, moving it up from the rock-bottom low of 0.25 per cent set in April 2009.

The central bank says its decision to raise rates still leaves considerable monetary stimulus in place.

Rates were lowered to their lowest practicable level in April 2009 to help encourage spending during the recession and to prepare the country to deal with economic hard times.

The decision to raise rates will affect financial vehicles such as variable rate mortgages and lines of credit tied to the prime rate.

It’s expected to be the first in a series of moves to move rates away from ultra-low levels as the economy improves.