Mortgage Blog
Bank of Canada Rate Announcement - July 10, 2019
January 20, 2021 | Posted by: Ken Fadel
The BoC left its target for the overnight rate unchanged at 1.75% for a sixth straight time and showed little willingness to consider any easing policy as stronger domestic growth offsets mounting global trade tensions.
The net effect suggest the BoC plans to remain on hold indefinitely and is not in any rush to move interest rates in either direction, “Recent data show the Canadian economy is returning to potential growth. However, the outlook is clouded by persistent trade tensions.”
A recent run of strong economic data is allowing the BoC to resist any temptation to ease monetary policy. Furthermore, futures markets suggest investors aren’t expecting the BoC to match cuts by the Federal Reserve over the next year. If this comes to fruition, there is a good chance that over the next twelve months Canada may end up with the highest policy rate among advanced economies.
Despite a strong second quarter, the BoC still believes growth for 2019 will be a sluggish 1.3%. Escalating global trade tensions have led to expectations the Canadian economy will grow about 1.9% in 2020, which is down from initial estimates of 2.1%.
As for household spending, it is no longer cited as an area that warrants particular attention. The BoC believes Canada’s housing market is stabilizing, although it did recognize that “significant adjustments” are occurring in some markets.
The BoC’s next interest rate announcement is schedule for September 4th.