Bank of Canada Interest Rate Update
Bank doesn't budge
The Bank of Canada announced today that it's maintaining the target for the overnight rate at 1/2 per cent due to slower-than-projected global growth, a weaker-than-expected US economy, and a poor second quarter for the Canadian economy.
While things didn't look great this past quarter, there is good news. For one? Global financial conditions have become more accommodative since July. Secondly, the reason for Canada's poor GDP performance in the second quarter was due largely to the Alberta wildfires in May-leading the Bank to expect a healthy economic rebound in the third quarter as oil production recovers, Alberta starts to rebuild and the Canada Child Benefit begins to spark consumer spending.
On the inflation front, things are in line with the Bank's expectations. Total CPI is below the two percent target and core inflation is sitting around two percent. Given all these factors, the Bank decided that the current target for the overnight rate is just right-and it's standing pat.
Yet again, this is good news for variable rate mortgage holders. If you're in the market for a new mortgage and are wondering if a variable mortgage is right for you, give me a call! I'd be happy to chat with you and determine if such a move makes sense for your specific situation.
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