Eight times a year, the Bank of Canada (BoC) meets to determine what the base lending interest rate should be. Any change to this rate indicates a subsequent change to other rates, such as mortgages and additional types of customer loans. This information is also a good indicator of the current status of the Canadian economy.
Today, the BoC announced that the benchmark rate on overnight loans will remain at 0.75% – unchanged for the third time since a reduction in January of 2015. This translates to a rate of 2.85% at your local bank.
Recent weeks have shown an increase in Canadian currency, which can be attributed to a rebound in oil prices and a weaker U.S. dollar. The bank plans to monitor this boost in the coming months to assess potential economic implications for Canada should the increase remain.
The BoC’s outlook on inflation also remains unchanged, estimating that the underlying trend of inflation is 1.6 to 1.8 per cent. Risks to financial stability continue to be elevated, although recent indicators suggest that consumption in Canada is holding up fairly well given the impact of lower oil prices on gross domestic income. As a whole, the bank remains optimistic that the economy will return to full output by the end of 2016.
The Bank of Canada is scheduled to meet again on July 15, at which point we will notify you of any rate changes and provide a general update on the Canadian economy.
If you have questions about your mortgage or what this means for you, please feel free to contact our office and speak to one of our Mortgage Brokers today.