Bank of Canada Holds Rate Steady At 1% – 10/19/2010
On 10/19/2010, The Bank of Canada (BoC) announced it is maintaining its overnight interest rate at 1%. The Bank Rate is correspondingly 1.25% and the deposit rate is 0.75%.
The move reflects the central bank’s lower expectations of a more moderate pace of growth in advanced economies due to global deleveraging activities and difficult labour issues. In particular, the bank sees a weaker than expected recovery in the US due to the combination of the mentioned factors.
In Canada, the bank has changed its outlook and expects a more gradual economic recovery with reduced household consumption and slower housing activity. It projects national growth of 3.0% in 2010, 2.3% in 2011, and 2.6% in 2012.
The bank expects growth and economic recovery in emerging markets to slow from tightening monetary policies, and global imbalances associated with tensions in the global currency market.
With rates still very low in Canada, it is a good opportunity to secure a mortgage as well as apply for credit. 5 year fixed mortgages are still very low, while variable rates are not quite as attractive as they used to be. We can expect rates to continue to stay relatively low for some time. Rates will not rise significantly until the economy is strong enough to support much higher rates. However, increases of 0.25% would not be unexpected (and also would not have too much of an impact).
The next scheduled date for announcing the overnight rate target is December 7, 2010.
Bank of Canada:
Thanks & Happy Investing! — The Investment Blogger © 2010