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.
Yesterday, the Bank of Canada opted to hold its overnight lending rate steady at 0.5 percent – a move widely expected by Canadian Economists. No changes have been made to corresponding prime rates throughout Canada’s major lending institutions, with TD Bank sitting at 2.85 percent and the remaining Lenders staying consistent at 2.70 percent.
While the Bank is confident that recent policy changes involving Canadian mortgages will aid in creating “more sustainable outlooks for household debt,” the new measures have yet to cool off the country’s hottest housing markets.
Inflation is evolving in line with projections in the Bank’s latest Monetary Policy Report (MPR), with the three measures of core inflation sitting at just below the 2 percent target. Despite the uncertainties defined in April’s MPR causing ongoing ambiguity over both Canadian and global outlooks, positive signs were noted in the Bank’s announcement.
Within the Canadian economy, adjustment to lower oil prices is “largely complete” and indicators of business investment have been promising. Traction in the global economy has also been encouraging, with the Bank projecting that growth will continue to strengthen at a gradual pace.
The next rate announcement will take place on July 12, 2017 along with the release of the Bank’s next Monetary Policy Report.
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