The central bank said it expects the economy to grow 6.0% in 2021, down from its previous forecast of 6.5%. However, the Bank now expects growth of 4.6% in 2022, up from its earlier forecast of 3.7%.
The Bank says it will keep its rate low until the economy is ready to handle an increase in rates, which it doesn’t expect to happen until the second half of 2022.
The global economy is recovering strongly from the COVID-19 pandemic, with continued progress on vaccinations, particularly in advanced economies. However, the recovery is still highly uneven and remains dependent on the course of the virus.
The Bank will remain committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2% inflation target is sustainably achieved. In the Bank’s July projection, this happens sometime in the second half of 2022.
Although the Bank is holding its interest rate, its projection is that interest rates are likely to begin rising in the second half of 2022. With the Bank holding its interest rates for the next year, variable rate mortgages will remain unchanged. This is a great time for you to revisit your current mortgage rate. If you have a fixed term mortgage, now may be the time to switch to a variable term! Take advantage of these historically low rates, and LIVE A MONSTER LIFE.
Stay tuned for the next announcement scheduled for September 8, 2021. Read the full report by Bank of Canada here.
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