Once again, the Bank of Canada left the country’s key interest rate unchanged today at 1.00%. That’s where it has stood since September 2010.
In turn, prime rate should remain at 3.00%, making today’s BoC meeting mostly inconsequential for variable-rate mortgage holders in the near-term.
Economists were looking to the Bank’s official statement for changes in its tone. Here’s what it said:
- There have been “tentative signs of stabilisation in European…sovereign debt markets”
- “…The outlook for the Canadian economy is marginally improved from the January monetary policy report”
- “Canadian household spending is expected to remain high relative to GDP as households add to their debt burden, which remains the biggest domestic risk.”
- “U.S. activity” is “stronger-than-anticipated”
- “The profile for core and total CPI inflation is somewhat firmer than previously anticipated”
In short, today’s BoC report seemed slightly more optimistic than the Bank’s recent announcements.
5-year bond yields (which lead fixed mortgage rates) responded by ticking a few basis points higher on the news.
The street consensus currently suggests that prime rate will resume higher in the second quarter of 2013, according to a recent Reuters poll.
The next BoC meeting is Tuesday April 17.
Rob McLister, CMT
How is it that things are getting better when many of our provinces are running deficits, and the federal gov’t too. With gas predicted to go up to $1.50 (not to mention the $1.30 it is now). Wait until food prices are affected. Oh, I forgot, they don’t affect CPI numbers. How is Europe stabilizing when the ECB is putting in copious amounts of money for “future” crisis? I predict a lower variable. Just look at the “real” unemployment numbers in the U.S., a potential war in Iran, and the LARGE personal debts people have put themselves in with borrowing, credit, and mortgages. There would be one huge hiccup in the system. Variables are the new norm. This is why banks are going to keep offering these 2.99% mortgages in the short term. I wonder if Scotia is next to offer that “deal”.