This morning marked the fourth of eight scheduled meetings for 2011 by the Bank of Canada. No surprises, the BOC left the rate unchanged. This keeps the Bank Prime rate at 3.00% and keeps those Variable rate mortgages well under 3.00%. Great news for borrowers.
In their press release, the BOC noted concerns about the high Canadian $dollar… increasing the BOC rate would probably mean an even higher $CAD, putting more pressure on Canada’s exports. The $CAD is currently $1.02US. Still, the BOC is concerned about inflation and keeping inflation within the Target Zone of between 1.00% and 3.00% has always been one of the biggest factors that drive BOC policies. “…inflation expectations remain well-anchored.”
The next BOC meeting is July 19… right now, it does not appear as though we will see any hikes until September or later…
Last week, the Bank of Canada (BOC) kept it’s Target Rate unchanged for the 4th consecutive meeting. That’s means Bank Prime is still 3.00%. Many Experts and Economists think the next rate hike will come as early as April or as late as June….
But not all Economists agree. Scotiabank’s economists say the rate will remain unchanged til October. They give a detailed explanation as outlined in this National Post article... but the main reasons are:
- high $Canadian Dollar (an increase by BOC usually increases the $CAD)
- global uncertainty… the middle east turmoil and European debt worries
- tougher financing rules including the new mortgage rules
- U.S. Fed not expected to raise their rate til next year…any increase by the BOC would push the $CAD even higher and make our exports even more expensive
- possible Federal election in Canada coming soon.. and provincial elections this year… history tells us that rates are usually flat during election time.
The Scotiabank economist make a good argument. I like the political reason… History shows us politics play a big role in the BOC actions…. Enjoy the low rates… They seem to be here for a while.
Today was the last of eight regularly scheduled meetings by the Bank of Canada (BOC). The BOC didn’t raise their Target rate.. no surprise here. With uncertain economic data in the U.S., Ireland and even a little shaky news in Canada, there was no chance of a rate hike.
It’s widely believed that Governor Mark Carney will not raise the rate until March 2011 at the earliest, or maybe even May 2011… possibly later… read more here.
One thing is for certain, the longer things remain uncertain, the longer we will be enjoying these record low rates… Variable rate mortgages can be had at 2.25% and a 5 year fixed is around 3.69%. Borrow wisely…