Catch Your Breath

No Change

The Bank of Canada announced this morning that it is maintaining its target for the overnight rate at 1 per cent.

Why?

In its accompanying statement the Bank noted that the economy is preceding largely on the path the Bank projected in its January Monetary Policy Report. While inflation and growth were slightly higher than expected in the fourth quarter of 2013, the Bank expects slack in the economy to keep inflation below the Bank’s 2 per cent target this year. The Bank does not view the risks associated with elevated household imbalances as materially changed and judges the current stance of monetary policy, with the overnight rate at 1 per cent, as appropriate.

percent house dollars

Some People Thought

Speculation of an impending rate cut by the Bank of Canada has receded in recent weeks following a modest acceleration of inflation and stronger than expected economic growth. The uptick in inflation and growth is in part due to a sharply lower Canadian dollar and, while not explicitly targeting a lower value of the loonie, policymakers at the Bank have welcomed the decline in the dollar. A depreciation in the currency tends to be inflationary and impacts consumer prices in fairly short order while traditional monetary policy, through adjusting the overnight interest rate, impacts inflation only with a significant lag of 12 to 18 months. With the lower loonie helping to pull inflation higher, we expect the Bank will likely maintain its target rate at 1 per cent until 2015 when economic conditions may require a gradual increase in the overnight rate.

Copyright BCREA reprinted with Permission

About Larry Yatkowsky

Larry is a recognized real estate expert. A veteran professional, his experienced counsel leads Vancouverites in his west side community to place their trust in a man passionate about his work. Uncompromising ethics bring a balanced approach to realizing your real estate dreams.

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*Disclaimer: Statistics Courtesy REBGV. While believed to be accurate they are not guaranteed.
**Numbers provided may vary as they are dynamically posted by the REBGV.

Reader Comments:

Servantes Says:
March 5th, 2014 at 12:23 pm

So, Vancouverites what are we waiting for.
Lets get out there and buy more properties. Foreign investor millioners are taking our government to the court demanding approval of applications still in pipeline. If they get approved sky is the limit for realestate pricing. With that in mind Vancouver properties are still very affordable.

March 5th, 2014 at 2:36 pm

@servantes

Do I hear a ‘You First’?

Village Whisperer Says:
March 5th, 2014 at 7:38 pm

The BOC has kept this rate since 2010. Everyone remember when this was called an “emergency interest rate”?

March 5th, 2014 at 7:46 pm

@Whisperer
Considering what may happen should interest rates actually increase we could consider it preventative medicine.

Servantes Says:
March 5th, 2014 at 11:37 pm

Larry
Are you suggesting “not to buy” property in Vancouver?

March 5th, 2014 at 11:54 pm

@Servantes
Nope!

Johnny Says:
March 6th, 2014 at 8:02 am

Actually Larry it would be good if rates move higher – it would curb out appetite for debt and put the brakes on the housing market – good all around.

March 6th, 2014 at 4:36 pm

@Johnny
Guess I’m cheap. I think the banks are making more than enough profit.

Banker Says:
March 6th, 2014 at 11:11 pm

Yuup Larry’s correct, when i sold my home last year and bought bank shares, i made 20% on the proceeds of my house. Im pretty sure the new owers of the house lost. Oh and the dividends more than pay my rent! And no property taxes

March 6th, 2014 at 11:39 pm

@Banker,
Congratulations – nothing wrong with renting. On the other hand, owning dirt isn’t a bad thing.

Johnny Says:
March 7th, 2014 at 6:25 am

Larry, it’s not about you being cheap – it’s about raising rates for the better of this country long term.

March 7th, 2014 at 9:44 am

@johnny
Can you take a minute or two to expand that statement.

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