The Bank of Canada announced today that it will keep its overnight rate at 0.5%, effectively making the bank rate 0.75% and the deposit rate 0.25%.
Twice last year, the bank cut their rate, hoping to stimulate the economy. Since then, the economy has started improving, thanks to a low loonie boosting manufacturing and exporting, as well as stabilizing oil prices. In fact, January 2016 saw Canada’s GDP grow by its largest amount in over 2 years.
On GDP growth
“First-quarter GDP growth appears to have been unexpectedly strong, but some of that strength is due to temporary factors and is likely to reverse in the second quarter.”
On economic drivers
“Still, it does appear that the positive forces at work in the economy are starting to outweigh those that are negative. Non-resource exports are expected to strengthen, but their profile is weaker than previously projected, in part because of slower foreign demand growth and the higher Canadian dollar.”
On job creation
“The economy continues to create net new employment, especially in services, despite job losses in resource-intensive regions.”
On household spending
“In this context, household spending continues to expand moderately.”
On federal budget
“The combined effect of all of these global and domestic developments would have been a modest downgrade of the Bank’s outlook. However, the fiscal measures announced in the March federal budget will have a notable positive impact on GDP.”
If your household is one of those that are moderately expanding spending, we might be able to help you. Contact us today if you’re looking to pay down or consolidate debt, renew your mortgage for a new term, or even buy a new home.