Prime Rate Remains at 3%

Bank-of-Canada-Benchmark-RateThe 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.

More Stories
canadian mortgages
Majority of Canadian Buyers Borrowing Their Maximum Approved Mortgage
Copy link