Mortgage Blog

Bank of Canada Rate Announcement - September 8, 2021

January 26, 2022 | Posted by: Ken Fadel

The BoC made its sixth interest rate decision of 2021 and was the case for the previous five, left its target for the overnight rate unchanged at 0.25%. This rate has sat at this lever since March 2020.    

The BoC also noted that it expects the economy to strengthen in the second half of 2021, with the caveat the fourth wave of the pandemic and ongoing supply bottlenecks could weigh on the recovery.  Despite this forecast, GDP contracted by about 1% in the second quarter, a much weaker number than anticipated reflecting the impacts of supply chain disruptions on exports.

As expected, housing market activity has pulled back from recent high levels.  Inflation remains above 3% as expected, boosted by a combination of base-year effects, gas prices, and pandemic related supply bottlenecks.

The BoC believes that the Canadian economy still has “considerable” excess capacity, and that the recovery continues to require “extraordinary monetary policy support.”  As such, it remains committed to maintaining its policy interest rate at its current “effective lower bound” until 2% inflation is “sustainably achieved.”  Based on the BoC’s latest projection, this would occur in the second half of 2022.

The BoC’s next scheduled policy announcement is October 27, 2021. 

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