short-term mortgage rates (which the BoC controls) are unlikely to jump near-term.
The Bank’s outlook can largely be summarized in these snippets from today’s announcement:
The global economy remains “vulnerable to major shocks from the U.S. or Europe.”
In Canada, “…Underlying (economic) momentum appears slightly softer than previously anticipated…”
Our economy has a “small degree of slack”
“…The pace of economic growth is expected to pick up through 2013.”
“Over time, some modest withdrawal of monetary policy stimulus will likely be required…”
“It is too early…to determine whether the moderation in housing activity and credit growth will be sustained.”
That last sentence is noteworthy. The Bank carefully crafts every last syllable in its rate statements. In this case, it is clearly reinforcing recent warnings that rate hikes are possible if housing-driven debt growth doesn’t taper off.
That said, ‘possible’ and ‘likely’ are two different concepts. With inflation undershooting forecasts and with future price expectations “well-anchored” (the BoC’s words), it seems unlikely that debt accumulation will move interest rates—at least not before the spring housing market gets underway.