What Does the Bank of Canada do?
Eight times per year, the Bank of Canada (BoC) makes an announcement about their base lending rate based on data they have assessed about the current state of the Canadian economy. Any change to this rate indicates a possible change to corresponding rates, such as interest rates for mortgages and additional types of consumer loans. This is because the rate set by the bank will directly affect prime rates offered by banks and other financing lenders. For more information, our recent blog post breaks down four of the most frequently asked questions regarding the BoC.
Were there any Changes to the Interest Rate?
No - Canada’s central bank opted to keep the benchmark interest rate at 1.75 percent today. This is great news for variable rate mortgage holders who will not see an increase in their mortgage payments as a result of today’s announcement.
What Information did the Bank Share about the Canadian Economy?
The overall outlook was generally positive despite elevated trade uncertainty and recent trade restrictions introduced by China. The slowdown in late 2018 and early 2019 has begun to pick up in the second quarter this year, and the bank reports:
- Recovery in the oil sector with increases in both production and prices
- Indicators of a more stable national housing market
- Continued strength in job growth; and
- A pickup in consumer spending and exports (although “inventories rose sharply in the first quarter, which may dampen production growth in coming months”).
The bank has also projected that the removal of steel and aluminum tariffs will have “positive implications for Canadian exports and investment.”
Both core and CPI inflation remain close to the bank’s 2 percent target.
Will there be any Interest Rate Changes in the Near Future?
The central bank always aims to set its rate within neutral range, which is between 2.5 and 3.5 percent. No increase in the key interest rate is expected until at least 2020. The bank’s next rate announcement is set to be released alongside their Monetary Policy Report on July 10, 2019.
How Can I Learn More?
For up-to-date information on interest rates and other mortgage news, you can follow us on Facebook or Instagram. Questions about today’s announcement? Leave a comment below, or contact our office and speak to one of our Mortgage Brokers today!