In a big development that will be scrutinized carefully by homebuyers across Canada, the Bank of Canada has decided to hold its rates at 1.75%. The BoC (Bank of Canada) has officially confirmed that targets will be maintained for the overnight rates at 1 ¾ %.
The bank rate currently stands at 2% with the deposit rates standing at 1 ½ %. The overnight rate is majorly impacted by economic growth, oil prices and other factors. There are trade issues which are affecting global demand more than what was originally expected and growth has slowed down in several big economies. Oil prices have come down considerably ever since the MPR (Monetary Policy Report) in October which shows market uncertainty regarding growth prospects worldwide and oil production expansion in the United States.
The economy in Canada saw growth in sync with the projections of the Bank of Canada in Q3 and momentum is lower in the fourth quarter till now on account of lower investments for the energy sector. There is a stabilizing effect clearly witnessed in the regional housing market as per the Bank of Canada which points at long-term housing growth and overall realty market stability in terms of prices and demand-supply levels. The household credit levels also appear to be more stable as per reports. The Bank of Canada continues to assess the overall effect of increasing rates and stricter mortgage rules for homebuyers and real estate developers.
Inflation has come up as per expectations of around 2%. The Governing Council at the bank has judged that policy rates have to rise into neutral territory in order to enable achievement of inflation targets. The impact of higher rates of interest on housing and consumption will affect the rate at which the increase takes place.