Despite a surge in 4th quarter economic activity, the Bank of Canada has held its key lending rate at 1.00% for the fourth consecutive meeting.
In turn, prime rate will remain at 3.00%, which is welcome news for variable-rate mortgage-holders.
Although economists expected no rate change today, TD Economics said last week that the Canadian economic outlook is “looking a little stronger than before.” As a result, “the (Bank of Canada’s) decision is becoming more finely balanced.”
The BoC had this to say in its statement today:
- The global economic recovery is proceeding “broadly in line with the Bank’s projection in its January Monetary Policy Report (MPR), although risks remain elevated.”
- The Bank said Canada’s recovery is proceeding “slightly faster than expected, and there is more evidence of the anticipated rebalancing of demand.”
- “While global inflationary pressures are rising, inflation in Canada has been consistent with the Bank’s expectations.”
- The Bank also noted that today’s decision leaves “considerable monetary stimulus in place”, but that “any further reduction in monetary policy stimulus would need to be carefully considered.
The next Bank of Canada rate meeting is April 12. However, the next rate hike isn’t expected until May 31 or July 19. That forecast is based on the median economist prediction and the prices of overnight index swaps (which traders use to gauge the market’s rate expectations.) As always, things could change as economic events unfold.
Source: Canadian Mortgage Trends