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Email this9:06 am
When the Bank of Canada finally does decide to start raising the benchmark interest rate, how much will it have to increase before we start seeing an increase in savings account rates? The benchmark rate used to be 0.25% but then was raised over time to 1%, but there was no concomitant increase in high-interest savings account rates. Anyone know?
10:12 am
Looking at the past three hikes, it would appear that bank savings rates trend upwards with rate hikes. It looks like many banks took a wait-and-see approach after the first hike, but subsequently raised their rates shortly after the second and third hikes (rate data from http://www.bankofcanada.ca/mon.....rest-rate/, and bank savings data from the comparison chart on this site):
Jun 1, 2010: BoC @ 0.5% (First Rate Hike)
Jun 30, 2010: ING @ 1.3%
Jul 20, 2010: BoC @ 0.75% (Second Rate Hike)
Jul 27, 2010: Outlook @ 1.75%
Aug 1, 2010: CTFS @ 1.5%
Aug 5, 2010: Accelerate @ 2.1%
Aug 5, 2010: ING @ 1.5%
Aug 5, 2010: PCFS @ 1.1%
Aug 9, 2010: PCFS @ 1.5%
Aug 19, 2010: ICICI @ 1.6%
Sept 8, 2010: BoC @ 1.0% (Third Rate Hike)
Sept 14, 2010: Accelerate @ 2.2%
Sept 14, 2010: Outlook @ 2.0%
Oct 3, 2010: Achieva @ 2.0%
Oct 21, 2010: MAXA @ 2.0%
Dec 3, 2010: CTFS @ 2.0%
My guess would be that some banks would raise their rates shortly after the next hike, and more would follow once the BoC does it a second time to reconfirm that the overnight rate is heading upward.
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