Despite a surge in 4th quarter economic activity, the Bank of Canada has held its key lending rate at 1.00% for the fourth consecutive meeting.
In turn, prime rate will remain at 3.00%, which is welcome news for variable-rate mortgage-holders.
Although economists expected no rate change today, TD Economics said last week that the Canadian economic outlook is “looking a little stronger than before.” As a result, “the (Bank of Canada’s) decision is becoming more finely balanced.”
The BoC had this to say in its statement today:
- The global economic recovery is proceeding “broadly in line with the Bank’s projection in its January Monetary Policy Report (MPR), although risks remain elevated.”
- The Bank said Canada’s recovery is proceeding “slightly faster than expected, and there is more evidence of the anticipated rebalancing of demand.”
- “While global inflationary pressures are rising, inflation in Canada has been consistent with the Bank’s expectations.”
- The Bank also noted that today’s decision leaves “considerable monetary stimulus in place”, but that “any further reduction in monetary policy stimulus would need to be carefully considered.
The next Bank of Canada rate meeting is April 12. However, the next rate hike isn’t expected until May 31 or July 19. That forecast is based on the median economist prediction and the prices of overnight index swaps (which traders use to gauge the market’s rate expectations.) As always, things could change as economic events unfold.
Steve Huebl, CMT
Last modified: April 25, 2014
No mention of the C dollar being a factor? I imagine that the recent surge in value puts fairly heavy pressure on the key lending rate, no?
Hi Mikester,
Regarding the Canadian dollar, the BoC said this:
“There is early evidence of a recovery in net exports, supported by stronger U.S. activity and global demand for commodities. However, the export sector continues to face considerable challenges from the cumulative effects of the persistent strength in the Canadian dollar and Canada’s poor relative productivity performance.”
Cheers,
Steve
Carney’s former coworker from Goldman Sachs was just charged with insider trading: http://www.theglobeandmail.com/globe-investor/former-goldman-director-charged-with-insider-trading/article1924993/
I don’t understand why Harper, who has destroyed the Canadian economy, would appoint someone from Goldman Sachs. Goldman Sachs destroyed the world economy, and profited off of the millions people who are now struggling.
those of us who are not ‘business experts’ see carney’s move as very prudent given the difficult world situation and the continuing economic woes in the u.s. Live with the low interest rates for a while longer folks..we are so tied to the u.s. and they are still in deep deep economic trouble
nick
Umm… You don’t even deserve a proper response.
the sky is falling
the sky is falling
lock in now !!!!
or just be reasonable,
access the lack of any real risk,
and stay happily variable
With the crisis in the middleeast growing by the day, it seems like economic recovery might take a hit, which will further delay in BOC hiking the overnight lending rate (hopefully). It seems like the canadian housing market will continue to grow this year as well.
How do you know there is no “real risk?” Should we all take your word for it?
What an ignorant statement. You know little about Mark Carney’s background if you’re tying him to this person. Carney has a spotless business pedigree, is highly respected in international circles and is an asset to our country.
Get a life.