Skip to content

Real Estate News: Bank of Canada holds benchmark rate at 0.25%… for now

January 21, 2010

It was no surprise when the Bank of Canada announced this Tuesday that it will be keeping its benchmark interest rate at 0.25% through until the second quarter of 2010.

What happens next still remains to be seen. The central bank has renewed its commitment to foster growth in the Canadian economy, but still has voiced its intent to raise interest rates this year – how much will depend on whether there are any significant changes to inflation or any drastic increases in housing prices.

The government has also stated that it’s not against toughening the purchaser guidelines under CMHC. Whether through reducing the maximum loan to value ratios or amortization rates.

Here’s what one of Canada’s economists had to say about the matter: (Source: Financial Post )

Andrew Pyle, associate portfolio manager, ScotiaMcLeod

The Bank has maintained its guidance for rates to stay here until the end of the second quarter, but likewise maintains its flexibility to change if necessary. That flexibility might come in handy if economic developments continue as the Bank has observed since its last meeting. Embedded in the statement though is the the same note of caution that what has transpired since the world hit the floor last year has been built largely on fiscal and monetary stimulus and there remains a huge question mark on what happens when the steroids are taken away. Where’s Mark McGwire when you need him? Bottom line, we’re getting closer to that first official rate hike, although some in the currency market may have hoped the first hint would have been dropped today.

Read more: BoC maintains 0.25% rate: Analysts’ reaction – FP Posted (January  19, 2010)

Advertisements
No comments yet

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: