Cell 604.582.5740 | suniel@suniel.ca

  Mortgage Calculator

Calculate Your Payments

  Buyer Resources

Best Real Estate Advice

  Seller Resources

Selling For Top Dollar

  Mobile Listings

Search Anywhere Always

  Here To Help You

You Can Contact Me Always

Bank of Canada Interest Rate Announcement

The Bank of Canada announced this morning that it is maintaining its overnight rate at 0.5 per cent. In the press release accompanying the decision, the Bank noted that although first quarter GDP growth appears unexpectedly strong, it believes that strength is temporary and will likely reverse in the second quarter. However, fiscal measures announced in the March federal budget are anticipated to have a notable positive impact on growth. The Bank is now forecasting that the economy will grow 1.7 per cent this year, 2.3 per cent next year and 2 per cent in 2018. That upgrade to growth means the output gap will close sooner than expected, likely in the second half of 2017.  That suggests a return to the Bank's 2 per cent target for inflation along the same time-line.  Overall, the Bank judges risk in the economy as roughly balanced. Interestingly, the Bank did not highlight the housing sector as a risk despite frenzied activity in both Vancouver and Toronto.


A significantly upgraded economic forecast will very likely close the door on further discussion of an impending rate cut, though downside risks in the global economy remain.  Indeed, as the economy accelerates and the output gap closes, we expect the Bank to move to a tightening bias. However, the Bank in unlikely to offset the fiscal stimulus provided by the budget and so an increase in interest rates is still some time away. If economic growth and job creation continue to surprise to the upside, it is possible that the Bank will begin raising rates in late 2017 and we could potentially see a modest rise in mortgage rates toward the end of this year in anticipation of tighter monetary policy.

Comments:
No comments

Post Your Comment:

* indicates required fields.
Your Name: *
Please note, your email will not be shown publicly
Your Email (will not be published): *
Comment: *
Please type the text as it appears above:
The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Real Estate Board of Greater Vancouver (REBGV), the Fraser Valley Real Estate Board (FVREB) or the Chilliwack and District Real Estate Board (CADREB). Real estate listings held by participating real estate firms are marked with the MLS® logo and detailed information about the listing includes the name of the listing agent. This representation is based in whole or part on data generated by either the REBGV, the FVREB or the CADREB which assumes no responsibility for its accuracy. The materials contained on this page may not be reproduced without the express written consent of either the REBGV, the FVREB or the CADREB.