In this month's video I discuss the Bank of Canada's decision to increase interest rates in July 2023. The increase was primarily driven by its goals of controlling inflation and maintaining economic stability. Speaking as a mortgage broker, I can tell you that the central bank increases interest rates for a few reasons:

1. Control Inflation: Inflation occurs when the prices of goods and services rise over time. By increasing interest rates, the Bank of Canada aims to reduce consumer spending and borrowing. This, in turn, can help curb inflation by slowing down economic growth.
2. Strengthen the Canadian Dollar: A higher interest rate can attract foreign investment, which can lead to an appreciation of the Canadian dollar. This can be beneficial for international trade and can help to keep inflation in check.
3. Maintain Economic Stability: The central bank strives to strike a balance between economic growth and controlling inflation. By raising rates, they aim to prevent excessive borrowing and spending that could lead to financial instability.
4. React to Economic Data: The Bank of Canada closely monitors economic indicators like employment numbers and GDP growth. If these indicators show strong economic performance, they may raise rates to prevent overheating.

In summary, the Bank of Canada increased interest rates in July 2023 to manage inflation, strengthen the Canadian dollar, and maintain economic stability. These factors can have a direct impact on mortgage rates and the overall housing market, which is why it's an important consideration for those in the real estate industry.