The Bank of Canada left its key lending rate unchanged today, in keeping with widespread expectations.
This implies the prime rate will remain at 3%, where it’s held since September.
Here are highlights from the BoC’s statement this morning:
- “The global economic recovery is proceeding at a somewhat faster pace than the Bank had anticipated.”
- “Stretched household balance sheets are expected to restrain the pace of consumption growth and residential investment.”
- “…business investment will likely continue to rebound strongly.”
- “…the economy will return to full capacity by the end of 2012.”
The Bank also lifted its 2011 growth estimate from 2.3% to 2.4%.
The next BoC rate meeting is 42 days from now on March 1. The price of assets based on the overnight target rate suggests there’s just a 17% chance of a rate hike at this meeting. Before today's announcement, the probability was near 30%.
"The BoC appears to have gone to lengths not to sound hawkish," said TD Senior Economist, Pascal Gauthier. "In the wake of this announcement, we maintain our call that the BoC is more likely to wait until July to raise the overnight rate."
The Bank’s Monetary Policy Update comes out tomorrow. This should give us a more detailed picture of the BoC’s expectations for inflation.
Awsome news!!
The rate will rise back to normal at some point, and all debtors should use the low rate now to get their financial house in order, or when they do rise some surprises will come.
No surprise there. BoC wants to talk down runaway consumer spending while keeping interest rates low. If they pull it off, it will hold the line on Inflation, the climbing dollar while allowing busines to invest and expand.
I’d be interested to hear how this news, combined with the most recent forcasts, might have altered your mortgage term review from November.
There is no surprise to me.
By my investigation results shows the recession has not come over yet.
Keeping the low interest rate will gives the strength to middle and low income mortgage customers.
Sai Ram
Jyothi