Mortgage Blog

Bank of Canada Rate Announcement - September 4, 2019

September 4, 2019 | Posted by: Ken Fadel

The BoC kept its target for the overnight rate unchanged at 1.75% this morning as it warned the U.S.-China trade conflict is having a greater impact on global growth than initially thought.

The BoC's rate statement did not offer any clear indication of its intentions longer term, however it is believed that the numerous mentions of the negative impacts of trade tensions on the world economy suggest the bank is willing to cut rates if necessary.

Heading into today's announcement, the consensus opinion was that the BoC would stand pat this month. Having said that, financial markets have priced in a 53% chance of a rate cut at the bank’s next announcement in late October.

Bank of Canada Governor Stephen Poloz has the tough task of weighing the relatively positive domestic growth and inflation trends with the rising threats to the world economy as a result of the U.S.-China trade tensions and looming Brexit.

Domestically, Canada’s displayed strong growth in the second quarter with energy production and the housing market leading the way.  Growth is however expected to slow down in the second half of 2019 as the stresses of the global economy continue.

The C.D. Howe Institute’s Monetary Policy Council (financial sector and university economists) just last week recommended the BoC hold its key target rate at 1.75% this month, but by March 2020 suggested the rate should be down to 1.25%.

The next rate announcement is scheduled for October 30th.

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