The Bank of Canada announced yesterday that they will be holding their key overnight rate at 1.0% for now and maybe for the foreseeable future.
Uncertainty around the global economic outlook has increased in the weeks since the Bank released its October Monetary Policy Report (MPR). Conditions in global financial markets have deteriorated as the sovereign debt crisis in Europe has deepened. Additional measures will be required to contain the European crisis. The recession in Europe is now expected to be more pronounced than the Bank had anticipated in October, as a result of increased deleveraging and tighter financial conditions, as well as necessary fiscal austerity and structural reforms.
The Bank will of course keep watching carefully to see if that raise rates some time in the future, or more correctly they will try to figure out if the Canadian economy could withstand higher interest rates (or worse when they have to raise the rates to combat the highly simmering Inflation Rate).
A quizzical comment in the document:
Although total CPI inflation has been slightly higher than projected, the Bank continues to expect the inflation rate to decline as a result of reduced pressures from food and energy prices and ongoing excess supply in the economy. Core inflation has also been slightly firmer than projected and is expected to ease as the output gap persists well into 2013.
They think inflation may stay under wraps, but I am not so sure.
Time to think about locking in your Mortgage rates? Maybe, if you don’t think you can withstand interest rates taking a sudden jump, then maybe it is time to lock in, me I will continue to stay with my floating rates (for now).