The Bank of Canada left our country’s key lending rate at 0.25%, as expected. (Chart)
22 of 22 economists surveyed by Bloomberg predicted no change, as did 11 of 11 primary securities dealers surveyed by Reuters.
In its statement today, the BoC said it “reiterates [its] conditional commitment to hold [its] current policy rate until the end of the second quarter of 2010.” Some economists don’t buy it, however. Scotia, for example, expects rate hikes by Q1 2010. Scotia is looking for a 1.75% increase in the overnight rate by Q4 2010.
The BoC also noted that “In recent weeks, financial conditions and commodity prices have improved significantly, and consumer and business confidence have recovered modestly.” On the other hand, it admitted that Canada’s “outlook is subject to considerable uncertainty.”
Overall, today’s BoC announcement is a non-event for Canadian mortgage rates in the near term. Its next interest rate announcement is July 21.
Last modified: April 28, 2014
Rob, is there any place the average person (non-mortgage professional) can compare rates? I know the US has a few sites like this but I can’t find anything in Canada
If Prime stays as is until summer 2010, any guesses as to what 5 year fixed rates might be at during that same summer?
Can/will they raise the fixed rates significantly over the next year even though Prime will still be so low?
As far as I know the 5 yr moves with the bond market and not Prime, so yes, theoretically they could raise it quite a bit while prime stays still. Would love some historical data on this if anyone has a link.
Some interesting analysis from the TD Bank economics group on implications for the prime rate:
http://www.td.com/economics/comment/gb060409.pdf
1) As Rob notes, the BoC reaffirmed its conditional commitment to hold rates current until Q2/2010;
2) The Bank sees downside risks to core inflation (i.e. risk that inflation will be lower than expected);
3) The rapid appreciation of the Canadian dollar will put downward pressure on prices (i.e. inflation) and hurt economic recovery.
Also of note is the analyst’s statement that “any move to quantitative or credit easing appears increasingly unlikely in the near-term, barring a substantial deterioration of conditions.”
Long story short: things look good on the inflation front for the foreseeable future. Therefore the Bank “retains considerable flexibility in the conduct of monetary policy at low interest rates.”
All this is food for thought for those who are convinced prime is going to skyrocket in the near term.
Al R
Couldn’t agree with you more Al! Also note the complete destruction of assets in the past 8 months…this is deflation…not inflation.
“Rob, is there any place the average person (non-mortgage professional) can compare rates? I know the US has a few sites like this but I can’t find anything in Canada.”
Hi Tyler,
There are several of them including: Fiscal Agents, Cannex, Ratebot, Rate Supermarket, etc.
You’ll also want to get in touch with a good mortgage planner who has access to various unposted rates.
Cheers,
-rob