We got our latest update from the Bank of Canada this week, and it was as everyone expected – they left rates alone. They have also maintained their tightening bias. Once threats to the global economy have subsided, they will look more closely at possible rate increases.
They are also paying close attention to “imbalances in the household”.
The good news is that inflation came in lower than expected so that has reduced some of the pressure to increase rates domestically.
This is great news for anyone with debts tied to prime as economists are still saying that no hikes are likely till at least mid-2013. So anyone with variable rates at good discounts should continue to hold them. With current variable rates around 2.65% at best, there’s little incentive to make this bet when we have 5 year fixed rates hovering around 3%,