What Does the Bank of Canada do?
Eight times per year, the Bank of Canada 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?
As expected, the central bank has opted to hold its key interest rate steady at 1.75 percent. The corresponding prime rate at all five of Canada’s big banks is currently sitting at 3.95 percent. Variable rate mortgage holders can expect no increase to their mortgage payments as a direct result of today’s press release.
What Information did the Bank Share about the Canadian Economy?
“Recent data suggest that the slowdown in the global economy has been more pronounced and widespread than the Bank had forecast in its January Monetary Policy Report.
As a result, Canada will see a weaker first half than was projected by the bank in January. In particular, the following factors were more unsteady than expected:
- Exports and business investment within the energy sector
- Consumer spending
- The housing market
The central bank is projecting total CPI inflation to remain slightly under their target of 2 percent throughout the entirety of 2019.
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; however, at this time, “Governing Council judges that the outlook continues to warrant a policy interest rate that is below its neutral range.” In particular, the bank will be paying close attention to household spending, oil markets and global trade when evaluating the point at which the next rate change will occur. The next rate announcement will take place on April 24, 2019, however an increase is not expected on that date.
How Can I Learn More?
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