The Governor of the Bank of Canada, Stephen Poloz, said Wednesday that there would be no change in the overnight rate of 1 percent.
With low inflation, weak economic growth and concerns about employment, it does not appear that an interest rate hike is in the cards anytime soon. In fact a survey of analysts predicted the next major move in interest rates would occur in second quarter of 2015.
Parsing the comments of Governor for clues to determine which way he is leaning is typical after one of his statements. Most commentators believe that he was adopting a ‘dovish’ tone, compared to previous statements. This would reinforce the thought that there will not be an upward move in interest rates anytime soon.
The last time the Bank of Canada changed its key rate was October 2010.
The falling Canadian dollar, the Governor said, could take up slack in the economy through greater exports. The loonie has fallen by 6% against the U.S. greenback since last October.
The Bank has raised its forecast for 2014 growth to 2.5% versus anticipated growth of 1.8% in 2013.
The other news this week came from four of the five major banks who, without fanfare, lowered their rates on a 5-year, fixed mortgage rate. RBC, TD, BMO and Scotiabank all lowered their posted rates respectively to 3.59% with the exception of Scotiabank which lowered its rate to 3.49% on new deals.
It is worth noting that many non-bank lenders are offering better rates and that the Welbanks Mortgage Group is able to negotiate better bank rates.
If you have any questions about the general direction of interest rates or about specific offerings from banks, please don’t hesitate to let me know.