It’s been a long year of interest rate hikes with the Bank of Canada increasing the overnight rate one last time in 2022 by 0.5%. The overnight rate is now 4.25%, a level Canadians haven’t seen since 2008. One of the reasons for this hike is that Canada’s inflation rate stayed the same at 6.9% for a second month in October. Though it has been cooling, it remains far above the Bank of Canada’s target. What does this mean for the average household? Borrowing money will be more expensive and any existing debt with a variable interest rate will cost you more to pay off. Many homeowners with variable rate mortgages have been feeling the pressure as their payments have gone up hundreds of dollars since March. After seven interest rate hikes in 2022, the BoC is now in a more delicate phase of balancing rates without slowing down the economy down more than needed. The BoC is signaling that future rate increases remain possible, but it will wait to see how inflation and the economy have responded to the rise in borrowing costs that it has engineered. Scotiabank’s SVP and Chief Economist, Jean-François Perrault, says that by this time next year interest rates should start to come down.