Eight times per year, the Bank of Canada meets to determine what the base lending rate should be. Any change to this industry benchmark indicates a possible change to corresponding rates, such as interest rates for mortgages and additional types of consumer loans. This information is also a good indicator of the current status of the Canadian economy.
The Bank of Canada has opted to hold their benchmark interest rate steady at 0.5 percent today, unchanged since July 2015. Most major Canadian lending institutions continue to offer a corresponding prime rate of 2.7 percent – with the exception of TD Canada Trust at 2.85 percent.
Today’s announcement came as no surprise to the majority of Canadian Economists, with the ambiguity of U.S. policy direction putting pressure on the future of Canada’s economy; According to the release, “the Bank’s governing council remains attentive to the impact of significant uncertainties weighing on the outlook.”
While there was no specific mention of the Trump administration in today’s press release, the bank has cited that several U.S. proposals would have “material consequences” on Canadian investment and exports.
CPI inflation hit 2.1 percent in January, largely attributed to the new carbon pricing measures in Ontario and Alberta. The Bank does not expect the impact of these measures to have a longstanding effect on inflation, and will look through the temporary increase.
The final numbers for the fourth quarter of 2016 are not set to be released until this coming Thursday, however many expect growth to be well above the Bank’s projected 1.5 percent outlined in January’s Monetary Policy Report. We have also seen some gains in employment throughout the country.
The next rate announcement will take place on April 12, 2017 along with the release of the Bank’s newest Monetary Policy Report.
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