The Bank of Canada raised interest rates on Tuesday by one-quarter of a percentage point to 1.75 percent, marking the seventh time that Canada’s central bank has moved in this direction since the summer of 2017. Prior to that, the rate had been at 1.5 percent for seven years, which would make it higher than the lowest ever. Canada’s six additional hikes so far have had a transformative effect on the Canadian financial system, from leaving mortgages more costly for homeowners, to stripping foreign currency out of the country’s housing market. But the bank warns that while the risks that have led it to raise rates, lower rates have also fueled an overheated housing market and bloated corporate profits. While many analysts believe rates will start to slow down soon — it took the Fed a year before it began decreasing its balance sheet, for example — Canada’s bank doesn’t expect any reduction in borrowing costs for the foreseeable future.
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