The Bank of Canada can finally see “home” on the horizon with the latest increase of interest rates now levelling out. Governor Stephen Poloz and his deputies on the Governing Council raised the benchmark interest rate a quarter point to 1.75 percent, as expected.

They said they feel pretty good about the economy now that politicians in Canada, Mexico, and the United States have agreed on a revised trade agreement and that evidence suggests households are adjusting well to higher borrowing costs. Policy makers raised their outlook for business investment and exports, suggesting the economy is becoming less reliant on debt-fuelled spending and the housing market.

Senior deputy governor Carolyn Wilkins’s emphasis on the still-low level of borrowing costs was a reminder that the public needn’t panic at the sight of marginally higher interest rates, and a gentle warning that no one should expect interest rates to stay at this level.

The economy is growing a little faster than the Bank of Canada predicted a few months ago, and “vulnerabilities” from elevated levels of household debt are “edging lower,” it said. Policy makers reiterated that interest rates must rise, and for the first time offered a more definitive notion of where it wants to go.

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