The Bank of Canada announced on October 19th, 2016 that it was keeping its trend-setting target overnight lending rate at 0.5 per cent.
The announcement and accompanying Monetary Policy Report (MPR) indicated that:
- Canadian economic growth will be lower than previously expected, “due in large part to slower near-term housing resale activity and a lower [growth] trajectory for exports.”
- The economy is now on track to “[return] to full capacity around mid-2018,” which is “materially later than Bank had anticipated in July.”
- Recently tightened mortgage regulations will “likely restrain residential investment while dampening household vulnerabilities,” and “should mitigate risks to the financial system over time.”
- Inflation remains well contained within the Bank’s target range.
As such, the Bank will keep interest rates on hold for at least another year and perhaps maybe even into 2018.
As of October 19th, 2016, the advertised five-year lending rate stood at 4.64 per cent, up 0.1 per cent from the previous Bank rate announcement on September 7th but unchanged from one year ago.
The next interest rate announcement will be on December 7th, 2016. The next release of the Monetary Policy Report, which will update the Bank economic forecast, will be on January 18th, 2017.