As expected, the Bank of Canada decided to stand pat on interest rates today, leaving the target for the overnight rate at 1%.
While inflation increased by more than expected since October, it still remains below the 2% target. The Bank attributes temporary factors to the increase - such as a lower Canadian dollar and sector-specific factors such as telecommunications and meat prices. Low oil prices also "pose a downside risk to the inflation profile".
The U.S. economy is strengthening - particularly in the area of business investment. On the flip side, growth in the rest of the world continues to remain slow, with some regions recently deploying further policy stimulus. While Canada's economy is showing signs of a recovery, low oil prices and a slow labour market continue to hinder significant progress. The Bank also noted household imbalances could potentially pose a risk to financial stability.
With this mix of news, many pundits believe the Bank will wait until later in 2015 to raise interest rates, which is good news for variable rate mortgage holders. Feel free to reach out to me to discuss how you can take advantage of these low rates by paying off your mortgage faster – or any other mortgage-related topic you have on your mind. I'd love to chat!