Thursday, July 17, 2014

Bank of Canada holds interest rate at 1%- again

As predicted, the Bank of Canada announced yesterday that it will maintain its overnight rate at 1% -allowing variable rate mortgage holders to, yet again, breathe easy.

Although CPI inflation reached the 2% target sooner than originally expected, core inflation has yet to meet that threshold. In addition, the higher CPI inflation is largely attributable to the temporary effects of increased energy prices, rather than a more permanent change in domestic economic fundamentals. For these reasons, the Bank doesn't believe an interest rate increase is necessary - yet.

Another factor contributing to the Bank's decision is the state of the global economy, which doesn't seem to be doing as well as the Bank had predicted back in April. Because of this, the Canadian economy isn't expected to perform as well as anticipated either - and the Bank doesn't believe it will reach full capacity until mid-2016 at the earliest.

All these factors spell good news for variable rate mortgage holders. If you're wondering if a variable rate mortgage makes sense for you - or if you have any mortgage questions at all - feel free to contact me, anytime. I'd love to help!

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