Bank of Canada stands pat
To few people’s surprise, the Bank of Canada is opting to maintain the target for the overnight rate at 1.75%–but the future of interest rates is much less clear.
While the Bank projected a temporary slowdown at the end of 2018 and into 2019, the slowdown has been much more pronounced than anticipated. According to the Bank, this is because–in addition to the fallout from last year’s drop in oil prices–Canada is also suffering from softer consumer spending, an underperforming housing market, and lower-than-expected exports and business investment.
We’re not alone. Countries across the world are dealing with trade tensions, low economic confidence and slow economic activity. As a result, many central bank–including the Bank of Canada–are being forced to acknowledge that global economic growth and financial conditions are a little slower than previously predicted, and the future remains a little uncertain at the moment.
All that being said, core inflation measures remain close to the Bank’s 2% target, while CPI inflation eased to 1.4 per cent in January, but is expected to increase to slightly below the 2% target through most of 2019. With inflation in check, the Bank judges that, for now, the policy interest rate should stay below the neutral range. It will continue to monitor the data to determine the timing of future rate increases.
If you’re a variable mortgage rate holder, this means your mortgage rate will stay where it is, for now. If you’re up for renewal in the near future–or are thinking about obtaining a variable rate mortgage at some point and aren’t sure if it’s the right decision–don’t hesitate to give me a call. We can discuss your specific situation and find the mortgage that’s best for you.
You can read the report in its entirety here: