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Canada’s big banks will raise their prime lending rates to 3.2 per cent, effective Thursday, after the Bank of Canada boosted its trendsetting policy rate.

The Bank of Canada on Wednesday raised its target policy rate by 25 basis points to 1.0 per cent from 0.75 per cent.

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“Recent economic data have been stronger than expected, supporting the bank’s view that growth in Canada is becoming more broadly-based and self-sustaining. Consumer spending remains robust, underpinned by continued solid employment and income growth,” the bank said.

After the central bank’s move, Royal Bank said that it will increase its prime lending rate to 3.2 per cent from 2.95 per cent, effective Thursday. Bank of Montreal, TD Canada Trust, Bank of Nova Scotia and Canadian Imperial Bank of Commerce will also raise their prime lending rates to 3.2 per cent.

Hawkish tone

More Bank of Canada hikes could be on the way. The bank’s statement accompanying the announcement strikes what several economists described as a “hawkish” tone, which means the bank is trying to tell the market that if the economy continues to outpace expectations and the data supports a move, it’s possible the bank could bring in another rate hike before the end of the year.