Posted by: MonsterMortgage.ca
The Bank of Canada once again convened to determine Canada’s overnight lending rate, the rate Canada’s largest financing institutions tie to their Prime interest rate for Canadian home-owners. As anticipated, the Bank of Canada kept the status-quo, as the Overnight interest rate remains at 1%, the rate the Bank of Canada has maintained since September 2010.
The Bank of Canada’s Govenor, Stephen Poloz, continued to echo sentiments previously shared by Mark Carney, the Bank of Canada’s previous Governor and now leader of the Bank of England, who reiterated remarks from his predecessor, Mark Carney that the Overnight rate can comfortably remain at 1% if inflation in Canada remains at levels below 2%. The Bank of Canada has indicated that the 2% inflation level is a key factor in their decision making process.
Economic factors such as Canada’s export and unemployment rate also weigh into Poloz’s decision to keep the Overnight lending rate steady. A weaker Canadian dollar typically increases the attractiveness of Canadian exports; however, the Bank of Canada has not found export numbers to their expectations.
Canada’s Overnight lending rate is of importance especially to Canadians with Variable Rate Mortgages, as the Prime rate which determines their interest rate typically moves lock-step with the rate set by the Bank of Canada. A low Overnight lending rate continues to provide Canadians with access to historically low mortgage and financing rates.