The Bank of Canada is opting to hold off on further interest rate increases-at least for now. In its recent interest rate announcement, the Bank decided to keep its overnight rate at 1% despite the fact inflation has picked up in recent months and the economy seems to be doing well.
The Bank made a number of projections in its recent announcement:
Inflation is projected to rise to 2% in the second half of 2018, which is right on target-although a little later than expected. The Bank attributes this to the recent strength of the Canadian dollar.
Global growth will likely average about 3.5% over 2017-19-but the Bank acknowledges that global uncertainty, particularly around NAFTA, could impact this.
Canadian economic growth will moderate in the second half of 2017 after a booming first half. This new, moderate rate will likely be sustained over the next two years, with GDP expanding at 3.1% in 2017, 2.1% in 2018, and 1.5% in 2019.
The Bank not-so-subtly hinted that future interest rate increases are likely in our future. That said, it said that it “will be cautious in making future adjustments to the policy rate. In particular, the Bank will be guided by incoming data to assess the sensitivity of the economy to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation.”
If you’re wondering what this all means for your specific mortgage situation, please drop me a line. I’d be happy to go over your options with you.