Short-Term Rates Stay Put
January 26, 2012 | Posted by: Crescent Mortgage Corp.
Canada’s key interest rate will end 2011 unchanged.
The Bank of Canada left its policy rate at 1.00% today, as anticipated.
In a statement, the Bank said European economic performance will be worse than expected, Canadian and U.S. growth are “slightly” better than expected, and inflation will “ease.”
It added: “With the target interest rate near historic lows and the financial system functioning well, there is considerable monetary policy stimulus in Canada.”
Following the announcement, BMO economist Doug Porter told FP: "...I don’t really sense much of a change at all in the bank’s overall view.”
The bond market, which leads fixed mortgage rates, apparently agrees. Yields changed very little in reaction to the BoC’s decision. (5-year bond yield quote)
The next BoC rate meeting is January 17, 2012. As of today, financial markets are pricing in a 10% chance of a rate cut at that meeting and 90% chance of no change, according to Bloomberg.