At the beginning of December, the Bank of Canada announced that they’re once again keeping their overnight rate target at 1.75%. The rate target has been at 1.75% for over a year now.
The bank reported that the Canadian economy grew by 1.3% in the third quarter of 2019, but this was a slower rate than earlier in the year. Even so, it was about where they expected it would be at this point.
The Canadian economy was bolstered by moderate increases in consumer spending, stronger wage growth, and housing investment, which itself was supported by population growth and low mortgage rates. As well, investment spending was up, even more than the Bank of Canada had predicted, most impressively in transportation equipment and engineering projects. Finally, commodity prices—a stable component of the Canadian economy—and the Canadian dollar have remained stable.
Inflation is on track, sitting around 2%, which the bank claims is “consistent with an economy operating near capacity”.
While the Canadian economy seems to be humming along, it wasn’t enough to motivate the bank to change the rate. Ongoing trade conflicts are creating uncertainty along global economic activity, so the bank is exercising a bit of caution for now, continually assessing how these conflicts impact the pillars of the Canadian economy.
For now, the benchmark rate is still lower than inflation. As such, anyone renewing a mortgage today will likely get a lower rate than in the past.
The next rate update will occur in January.
If you want to know what options are available, are interested in renewing your mortgage to take advantage of the low rates, or want to find the best rate for you today, contact our office.