The Bank of Canada decided to keep rates where they are in its December interest rate announcement.
There were countless reasons for its decision to stand pat. On the global front, trade conflicts, geopolitical developments, and uncertain growth prospects are weighing on the global economy. Domestically, the Canadian economy grew in line with the Bank’s projection in the third quarter but is expected to slow down in the fourth due to a weak energy sector.
That said, there is good news coming out of the Bank’s announcement. The new USMCA, combined with new federal government tax measures and ongoing capacity constraints, are expected to boost foreign investment. Household credit and regional housing markets appear to be stabilizing and inflation has been evolving as expected (tracking around 2%).
While the Bank acknowledges higher interest rates will be required in the future to maintain its inflationary target, it’s going to look carefully at how higher interest rates will impact consumption and housing, as well as how global trade policy developments pan out.
If you have any questions about the Bank of Canada’s most recent interest rate announcement and how it could potentially impact your mortgage, please don’t hesitate to drop me a line. or ask on this blog