Another rate hike...As many in the industry expected, the Bank of Canada increased its overnight rate by a quarter of a percentage point this morning, bringing it to a rate of 1%. Here is a summary of the reasoning behind the announcement: - The Bank revealed that the global economic recovery is uneven - some emerging market economies are proceeding full steam ahead, while some advanced economies are experiencing rather weak growth. The Bank of Canada will likely keep its eye on this when it comes time for its next rate announcement on October 19. - When it comes to the Canadian economy, a slightly softer-than-expected second quarter has caused the bank to revise its recovery predictions. The recovery is now expected to be more gradual than previously predicted, although it still believes consumption growth and business investment will continue to be strong. Low credit - particularly fixed rates, which have seen a dip due to global bond yields - will keep these areas running on target. - It appears that this may be the last rate increase for at least a little while. According to the Bank: "Any further reduction in monetary policy stimulus would need to be carefully considered in light of the unusual uncertainty surrounding the outlook." If you have a variable rate mortgage and are wondering whether it's time to lock in, please feel free to give us a call.
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