In their statement released today the Bank of Canada announced that they will not change the overnight rate. Currently sitting at 1.75% the overnight rate has remained unchanged since October of last year. The Bank had formerly been steadily increasing the overnight rate but stopped when the economic climate warranted a pause. The same remains true these seven months later.

The economy experienced a slowdown at the end of last year and the start of this one, but it appears it was probably just a blip. The Bank’s April report projected the economy picking up in the second quarter, and it has. The oil sector has seen production increases and prices have remained above the recent lows. The housing market is stabilising but a few areas remain weak.

Job growth, consumer spending, and exports have each seen growth in the second quarter and business investment has firmed up. However, because inventories have experienced a spike we may see a slow down in production in coming months.

The removal of tariffs on aluminum and steel as well as the pending CUSMA ratification spell good news for Canadian investments and exports. However, ongoing global trade tensions still remain a threat, especially as new Chinese restrictions have directly impacted Canadian exports.

An inflation rate of 2.2% is ideal for the growth of our country, but both Core and CPI inflation rates are expected to sit at 2% over the next few months. For this reason the Bank has decided it is not prudent to change interest rates just yet. However, they will be keeping a steady eye on household spending, global trade, and oil markets for signs of growth and readiness.

For more on how this may affect your mortgage please contact us!