Mortgage Blog

Bank of Canada Rate Announcement - December 8, 2021

January 26, 2022 | Posted by: Ken Fadel

The Bank of Canada has once again stayed the course on interest rates in its final scheduled announcement of the year, keeping its target for the overnight rate unchanged at 0.25% and maintaining its projection that this rate will rise in the middle quarters of 2022.

The BoC stated that it was “closely watching” the inflation issue and that growth in Canada’s economy had been “as expected” in the third quarter at 5.5%, as higher vaccination rates have allowed consumption levels to rebound.  CPI inflation numbers are predicted to remain elevated through the first half of 2022 before returning to the BoC’s target range of 2%.

The BoC statements suggests that while the economy had “considerable momentum” going into the fourth quarter of 2021, the Omicron variant adds uncertainty with tightening travel restrictions and declining oil prices.

It was noted that housing activity has been moderating but appears to be regaining strength – particularly in resales. Despite this, the BoC believes the recent flooding in BC and the emergence of Omicron will impact growth via supply chain disruptions and reduced demand for services.

Even with inflation recently hitting its highest level in two decades, the BoC’s approach to the issue is a flexible one that allows it the ability to manoeuvre when and if required.  To quote the BoC release, “What our resolve does mean is that if we end up being wrong about the persistence of inflationary pressures and how much slack remains in the economy, we will adjust.”

The BoC’s next scheduled policy rate announcement is scheduled for January 26th.

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