The Bank of Canada announced today it will be holding its target overnight rate at 0.25%. While today's announcement was cautiously optimistic about economic recovery, there is a caveat. Pandemic-related supply chain disruptions and rising COVID-19 case counts in many regions are still issues of concern.
The current target overnight rate has not changed since March 2020, when COVID-19 was first officially declared a global pandemic.
Staying the course
Today’s announcement is, for the most part, a continuation of the themes the Bank has been speaking about for months, says James Laird, co-founder of Ratehub.ca and president of CanWise Financial.
The Bank of Canada intends to maintain low interest rates until the second half of 2022, while also leaving in place their quantitative easing strategy. Quantitative easing refers to the injection of new money by the Bank to help boost the economy. The Bank will also continue to monitor inflation and employment statistics.
Bank of Canada meeting dates
Laird believes with the federal election behind us, the Bank will likely feel more comfortable speaking about the potential risks and challenges moving forward. With that in mind, consider paying special attention to the next announcement on October 27, which will contain the Monetary Policy Report. Every quarter, the Bank puts out this report outlining economic projections for inflation and growth and assessing risks.
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What it means for mortgage holders and mortgage shoppers
For current mortgage holders and those who are considering getting a mortgage in the near term, there is little new information in this latest Bank of Canada announcement. “Anyone who currently has a variable rate mortgage can expect their rate to remain unchanged until at least the second half of next year. Anyone who is shopping for a fixed rate mortgage should get a pre-approval, as this will hold today’s rates for 120 days,” Laird adds.
Check out this piece by Alyssa Furtado, Co-CEO of Ratehub, for some helpful tips on how to get approved for a mortgage.