Bank of Canada Announcement - December 9, 2020

Posted on 09 December, 2020

What Does the Bank of Canada do?

Eight times per year, the Bank of Canada (BoC) makes a scheduled announcement about their benchmark 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 financial 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?

Canada’s central bank announced no change to their benchmark interest rate today, holding it at the effective lower bound of 0.25 percent. The Quantitative Easing (QE) program also remains in place at a minimum $4 billion dollar spend per week.


What Information did the Bank Share about the Economy?

  • New waves of COVID-19 are anticipated to cause setbacks in economic recovery on a global scale. However, the new development and rollout of COVID-19 vaccines is boosting optimism regarding the end of the pandemic and return to normal activities.
  • Within Canada, commodity prices (including oil) are increasing due to demand. We have also seen appreciation of the Canadian dollar due to declines in the US exchange rate.
  • CPI inflation increased to 0.7 percent in October, largely attributable to increased prices for fruits and vegetables.
  • Recovery in the employment sector remains largely unbalanced across industries. In general, jobs that were lost due to the pandemic are slowly returning.
  • The Bank noted stronger economic momentum than anticipated at the beginning of quarter four. However, additional restrictions have recently been put into place due to sharp increases in COVID-19 across the country.
  • Increased restrictions are expected to impact economic recovery into the first quarter of 2021.
  • The bank projects measures of core inflation to remain below the two percent target through the near future. Economic recovery is still highly dependent on ‘extraordinary monetary policy support.’
  • Such monetary support includes the bank’s QE program, which is expected to continue until further into the recovery phase. The program will be adjusted as necessary to help move inflation towards the two percent target.

Will there be any Interest Rate Changes in the Near Future?

The first rate announcement of 2021 will take place on January 20, however no rate change is expected at that time. Current projections by the Bank of Canada hold the rate at 0.25 percent until 2023.


How Can I Learn More?

For up-to-date information on interest rates and other mortgage news, you can follow us on Facebook, Instagram or LinkedIn. Questions about today’s announcement? Leave a comment below, email us at , or contact our office and speak to one of our mortgage brokers today!


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