The Bank of Canada kept the status quo on it’s key lending rate today. Prime rate will therefore stay where it is, at 4.75%.
The Bank seemed less concerned about inflation in this statement, saying, “Core inflation has stayed at 1.5 per cent as expected.” The BoC expects that “total and core inflation will converge on 2 per cent in the second half of 2009.” Falling commodity prices could help in that respect.
As for our economy, the Bank basically described Canada’s output as “slightly lower than expected,” but not enough so to cut interest rates.
The 5-year bond seemed somewhat unfazed by the BoC’s comments. It’s still hovering near 3%. The Canadian dollar, however, sank to it’s lowest level versus the U.S. dollar in over a year, before rebounding strongly.
The BoC’s statement today offered few clues as to when they would alter rates next. We’ll see what happens between now and the BoC’s next interest rate meeting on October 21.
Last modified: April 25, 2014
The bank left the rates as they were to support the economy. By not rising them, it gave easier access to funds for the businesses and people. With the oil prices up and the dollar down, it is just a little but necessary help. I think that October will not bring much change, unless our economy miraculously gets revived. Your ever optimistic Vancouver realtor
Jay
Sure, except the decision was between whether to DROP rates further or leave them alone.
The Bank seems to have made a good choice, IMHO. Although the economy has come in weaker than expected, remember that the target is inflation – not growth.
The consensus seems to be that unless we see some really nasty job numbers or the economy really tanks, the Bank will keep rates unchanged, and today’s job report looks to be fairly good.