Bank of Canada Holds Rates Steady

Citing NAFTA negotiations, trade policy developments and inflation, the Bank of Canada has maintained the current benchmark rate at 1.5% in today’s announcement.

“The bank readily acknowledges that economic conditions are ripe for more rate hikes, in spite of the trade uncertainty. The consumer price index hit 3 per cent in July – a surprise spike that the bank attributed to higher airfares. Economic growth was also hotter than expected in the second quarter, at a 2.9 per cent annual clip.

The bank also pointed out that household debt levels are coming down, the housing market is starting to stabilize and both business investment and exports are growing “solidly.”

What does this mean for variable rate loan holders? You’re rates will remain steady for the time being.

Economists are predicting that rates may increase at the next announcement on October 24^th.

“The Bank of Canada estimates that its neutral interest rate is roughly 3 per cent – a level that neither revs up the economy nor slows it down. At 1.5 per cent now, the bank’s key rate is still well below that threshold. “

For the full Globe and Mail article click here.

For the Bank of Canada press release click here.

Wondering how this may affect your borrowing rates? Contact your Mortgage Broker for more information.