Yesterday, the Bank of Canada announced that they would be keeping its benchmark overnight lending rate at 0.5 per cent.
With the current state of the economy, including oil below $30 a barrel and the loonie sitting at under 70 cents US, many would expect to see a subsequent decrease in mortgage rates. However, despite the weak economy, CIBC Deputy Chief Economist Benjamin Tal expects rates to “remain relatively stable” after the recent rate increase by all major banks. David Madani, an economist with Capital Economics in Toronto, disagrees. According to Madani, Capital Economics “wouldn’t rule out another rate cut in March or April at the latest,” after the upcoming federal budget is released.
Along with yesterday’s rate announcement, the Bank also released the first Monetary Policy Report of 2016. Key findings include that the Bank now expects a 72 cent loonie for the foreseeable future, dropping from the 76 cents that was projected in their last Monetary Policy Report in October 2015. It expects oil prices to hold steady at around $37 US per barrel.
Inflation in Canada is evolving as expected. Total CPI inflation remains near the bottom of the Bank’s target range, although it is projected to rise to about 2 per cent by early 2017. Canada’s economy is expected to grow by about 1.5 per cent in 2016 and 2.5 per cent in 2017.
The Bank is slated to make their next rate announcement on March 9, 2016. For up-to-date information on interest rates and other mortgage news, be sure to follow us on Facebook or Twitter. If you have questions about your mortgage or what this information means for you, please feel free to contact our office and speak to one of our Mortgage Brokers today.