The Bank of Canada's hike in the key interest rate is showing confidence in the economy according to the Vice President of Business Development at the WFCU Credit Union.
The rate jumped to 0.75% from 0.5% which is the first increase in nearly seven years.
Steve Deneau says it will be a bit more costly for people who are tied to variable rate products like home equity lines of credit and other loans.
He says this is actually good for the economy.
"I wouldn't be too panicked by the rate increase," he says. "We have seen some additional activity here at the WFCU Credit Union but it is a modest rate increase and I think the Bank of Canada got it right."
Deneau says the low interest rate left little wiggle room for the Bank of Canada.
"What happens is, it also doesn't leave very much room to stimulate the economy if there is an external shock. If something happens that is unexpected and you are at the rock bottom, there is no place to go."
He believes this may put some downward pressure on the hot housing market especially in cities like Toronto and Vancouver.
He also points out the incredibly low interest rates also led to record debt levels.