Bank of Canada Announcement - December 4, 2019

Posted on 04 December, 2019

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?
The Bank of Canada opted to maintain its policy interest rate at 1.75 percent this morning, during the final rate announcement of 2019. Global growth is evolving in line with October projections, with “nascent evidence that the global economy is stabilizing.”

What Information did the Bank Share about the Canadian Economy?

  • The bank is citing ongoing trade conflicts as the most substantial risk to the outlook of the Canadian economy.
  • There was modest growth of 1.3 percent in the third quarter of 2019, which was largely anticipated by the central bank.
  • Stronger wage growth has contributed to a recent increase in consumer spending.
  • There has also been strong investment in the housing sector, which the bank attributed to both population growth and low mortgage rates.
  • Additionally, investment spending as a whole has been unexpectedly robust; particularly in transportation equipment and engineering projects.
  • Inflation remains at the 2 percent target, and is expected to see a temporary increase due to higher gas prices in the near future.

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 currently between 2.25 and 3.25 percent. The next rate announcement, along with their Monetary Policy Report, will be released on January 22, 2020. The report will provide an updated summary of economic activity in quarter four of 2019, along with economic projections for 2020. Ongoing trade conflicts continue to be monitored by the Governing Council, with particular emphasis on how they affect consumer spending and housing activity.

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!

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