Fed Rate Hike Pressures Bank of Canada to Raise Interest Rates

The U.S. Federal Reserve has raised interest rates for the first time in three years, which could put pressure on the Bank of Canada to follow suit.

Economists say this move could lead to higher borrowing costs for Canadians and a weaker Canadian dollar compared to the U.S. dollar.

Derek Holt, vice president at the Bank of Nova Scotia, said he'd be surprised if the rate hike doesn't 'add one more ingredient' for Bank of Canada Governor Tiff Macklem to raise interest rates soon.

The main reason the Bank of Canada might raise its key rate is due to rising inflation, which has been hovering around three per cent in Canada since July and August.