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. They want to see if they should raise rates some time in the future. More correctly, they will try to figure out if the Canadian economy could withstand higher interest rates. Worse, they must determine 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? If you don't think you can withstand interest rates taking a sudden jump, then it might be time to lock in. I will continue to stay with my floating rates (for now).
Interest Rates 2011
- Interest Rates Stay the Same But Mortgages Rules Get Tighter 2011 Raising interest rates in 2011 really slowed down the Real Estate world. Tighter rules for mortgages were also introduced. No, they didn’t, interest rates dropped again, and the charlatans simply found other ways to get around the rules.
- Slutty Money from Canada The term “Slutty Money” refers to loose and easily available cash due to low interest rates and ongoing monetary stimulus in March 2011. This article examines how Canada’s Bank of Canada policies, particularly the Key Overnight Rate, impact inflation, household spending, and investments. With economic uncertainty, a slow return to normal interest rates is predicted, but nothing in the economy is truly predictable. The piece highlights concerns over inflation, export challenges, and the risks associated with an overly abundant money supply.
- Loose Money Continues in May 2011 for Canada Explore the May 2011 interest rate updates from the Bank of Canada and what they mean for your investments and savings.
- Bank Rates Hover in Canada Again Explore the July 2011 rates from the Bank of Canada as it maintains its overnight rate at 1%. Understand the implications.
- Loose Money Continues in Canada (Sept 2011) The Bank of Canada confirmed no rate increases, September 2011, keeping the key overnight rate at 1%. Explore the implications.
- No Rate Increases in Canada (October 2011) Explore the current interest rate set October 2011 by the Bank of Canada and its impact on borrowers amid inflation concerns.
- Low Interest Rates to End 2011 from Bank of Canada Stay informed about the Bank of Canada rates for December 2011 and what they meant for inflation and future mortgage options.
What do you think could happen to the housing markets should interest rates start an upwards trend?
I don’t know, what do you think?