Bank of Canada holds rates steady
Borrowers can breathe easier
Mark Carney, Governor of the Bank of Canada
Like students who keep getting extensions for past due assignments, heavily-indebted borrowers got yet another reprieve today when it was announced the Bank of Canada (BOC) will keep its key overnight rate at 1 per cent.
It’s an opportunity for at risk households to use the time wisely, though it’s sometimes easier to be complacent when it seems extensions keep being given.
Much has changed since the BOC’s last scheduled rate setting policy meeting back in April. The news release at the time suggested strongly that the BOC was beginning to be concerned about inflation and that it was leaning towards increasing rates sooner rather than later. Fast forward to today: not only did the BOC hold rates steady, but there were no hints that rates would be raised anytime soon.
Recent data from the United States has shown that economic growth has slowed, but the BOC made it clear today that it’s the situation in Europe and emerging markets that may be more disconcerting. In particular, it’s the combined impact of these developments on commodity prices and therefore Canada’s economy, that is troubling over the near term.
The BOC is being transparent with respect to what it intends to do with monetary policy as it tries to anchor expectations and help households and the public budget. But trying to influence those expectations is going to get harder the more global conditions change, making the BOC deviate from the expectations that it has been trying to set.
Category: Business
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