In turn, prime rate will remain at 3.00%, making today’s BoC meeting a non-event for mortgage holders in the short-term.
The BoC’s call comes amid languid recent growth and inflation numbers. Here’s a sampling of the Bank’s commentary from its official statement:
- The BoC sees a “weaker-than-projected recovery in the United States.” (No revelations there.)
- The potential exists for “a more protracted and difficult global recovery.”
- “…domestic considerations…are expected to slow consumption and housing activity in Canada.”
- “Inflation in Canada has been slightly below the Bank’s July projection.”
- “The inflation outlook has been revised down and both total CPI and core inflation are now expected to converge to 2% by the end of 2012.” (As long as inflation doesn’t threaten to exceed the Bank’s 2% target for any extended period, that’s generally good news for mortgage rates.)
- The 1% overnight target rate “leaves considerable monetary stimulus in place.”
The Bank also adjusted its growth forecasts as follows:
- 2010 growth cut to 3.0% from 3.5%
- 2011 growth cut to 2.3% from 2.9%
- 2012 growth raised to 2.6% from 2.2%
Translation: Things are worse than the Bank expected.
A key takeaway here is that the BoC sees little inflation threat through 2012. That’s a long ways off. If true, this improves the odds that short-term and variable-rate mortgages will be the lowest-cost options for the next few years. (Remember, however, that the BoC can raise its forecasts just as easily as it lowers them.)
The next and final interest rate meeting of 2010 is on December 7. As of today, most analysts expect no rate move at that meeting either.