The Bank of Canada has raised its key interest rate to 0.75% (from 0.50%). This hike in interest rate is the first in seven years. Such a move is bound to increase the costs of mortgages, home equity lines of credit and other loans linked to the big bank prime rates.

In a statement accompanying the rate decision, the central bank said the Canadian economy has been robust, fuelled by household spending. The interest rate increase had been widely expected after senior Bank of Canada officials signalled in speeches and interviews over the past weeks that lower rates had done their job, and the Canadian economy was performing well.

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