The Bank of Canada announced today that it is holding the overnight rate steady, noting that the Canadian economy was stronger than expected in the first quarter, although housing has remained soft as it adjusts to new mortgage rules and higher rates. However, labour income growth is solid, which supports “the expectation that housing activity will pick up and consumption will continue to contribute importantly to growth in 2018.” The Bank did hint that we could see potential future increases in order to keep inflation in check. The next rate-setting day is Wednesday, July 11.
Today’s Bank of Canada rate hold announcement marks almost four straight years that the key benchmark rate has remained unchanged, since September 8, 2010. Great news if you have a variable-rate mortgage or home equity line of credit; the prime rate stays at 3%.
The announcement noted that “the risks to the outlook for inflation remain roughly balanced, while the risks associated with household imbalances have not diminished.” With these considerations, the Bank is maintaining its monetary policy stimulus, and remains neutral with respect to the timing and direction of the next change.
The next rate-setting day is October 22nd.