Announced last week, the Bank of Canada (BoC) decided to leave its benchmark interest rate at 0.5% and according to economists, this is no surprise. Between the years of 1990 to 2015, the Canadian interest rate has fluctuated in the following way:
|Average Interest Rate between 1990-2015||5.98%|
|Record High Interest Rate – February 1991||16%|
|Record Low Interest Rate – April 2009||0.25%|
As Canada’s energy sector continues to adjust to lower oil and resource prices, the improved U.S. economy and Canadian household spending are supporting the current economy. BoC’s decision to remain at half of a percent is expected to remain for a substantial amount of time as long as the signs of growth in the third quarter hold steady.
Movements to the Canadian dollar are helping to absorb the impact of lower commodity prices and spurring growth of rate sensitive exports.The Canadian resource sector is still adjusting to lower oil and commodity prices and it is believed these adjustments will take a considerable amount of time.
On a positive note, the bank made no mention of modifying July’s forecast for positive changes in the third quarter and continuing until 2017.
Other news gathered by Statistics Canada and the BoC include:
- Trade Results were higher than expected
- Job Reports in August exceeded expectations
- Total Inflation remained near the bottom of BoC’s target range between 1-3%, while Core Inflation is close to 2%.
These findings indicate that Canada is moving from an economic slump and into a recession.
The Bank of Canada is scheduled to make another announcement on October 21, along with an updated monetary policy report. With lower interest rates, comes more opportunity for those looking to enter the real estate market.
Give me a call to discuss Calgary mortgage rates and how this BoC announcement can affect you.