Bank of Canada did not make a “micro-cut” to its overnight lending rate today contrary to some speculation. The overnight rate is holding steady at 0.25%.
The borrowing costs still remain extraordinarily low and provide excellent incentive for home purchases to start the year.
Given the surge in COVID cases, along with a strong Canadian dollar, a negative growth outlook to start the year and lower December employment numbers, some suggest that this may have been the right time to lower the policy rate.
The BoC cited the mass roll-out of effective COVID-19 inoculations along with further fiscal and monetary policy support as major factors contribution to a more positive medium-term outlook for growth, hence the rate-hold. The acknowledgement of stronger commodity prices may also be the reason that the Bank may be willing to tolerate an appreciating currency. The prediction is that the policy rate will remain low for a long while likely into 2023.
The banks next policy announcement is scheduled on March 10th.
Al Nenshi - Quantus Mortgage Solutions