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Bank of Canada Maintains Overnight Rate

The Bank of Canada announced Wednesday it is maintaining the target for the overnight rate at 1.75%.

The central bank noted trade conflicts and concerns around the energy sector as reasons for maintaining the Bank of Canada interest rate.

“As expected, the Bank of Canada maintained its overnight rate at 1.75 per cent. The Bank continues to monitor the Canadian energy sector, as well as the impact of international trade conflicts on the global economic outlook,” James Laird, president of CanWise Financial, said. “On a positive note, the Bank is pleased by indications of strong economic growth, including a healthy labour market and stabilizing housing market.”

Following weak economic performance in 2018 and early 2019, the Bank noted a return to growth potential in the second quarter of this year.

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The Bank also recognized the positive impact that low long-term mortgage rates have had on housing activity.

“This announcement contains welcome news for Canadians considering a variable rate mortgage, as the Bank has signalled that the current policy interest rate remains appropriate,” Laird said. “In the absence of major economic changes, the Bank seems intent to maintain this policy interest rate in the near future.

“Five-year fixed rates are currently at historic lows, according data from Canadians looking for a mortgage should speak to a mortgage professional to lock in a rate and protect themselves against any potential rate increases.”

It appears the Bank is intent on maintaining its target for the overnight rate, at least in the near future, with no signs of a Bank of Canada interest rate hike on the horizon.

“Recent data show the Canadian economy is returning to potential growth. However, the outlook is clouded by persistent trade tensions. Taken together, the degree of accommodation being provided by the current policy interest rate remains appropriate,” it said in today’s release. “As Governing Council continues to monitor incoming data, it will pay particular attention to developments in the energy sector and the impact of trade conflicts on the prospects for Canadian growth and inflation.”

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