{"id":16560,"date":"2019-05-29T11:03:34","date_gmt":"2019-05-29T15:03:34","guid":{"rendered":"https:\/\/www.zoocasa.com\/blog\/?p=16560"},"modified":"2019-05-29T11:03:36","modified_gmt":"2019-05-29T15:03:36","slug":"bank-of-canada-may-2019","status":"publish","type":"post","link":"https:\/\/www.zoocasa.com\/blog\/bank-of-canada-may-2019\/","title":{"rendered":"Interest Rates Stay at Status Quo in Bank of Canada May Announcement"},"content":{"rendered":"\n<p><br>The Bank of Canada has\u00a0<a rel=\"noreferrer noopener\" aria-label=\"held its trend-setting Overnight Lending rate at 1.75% (opens in a new tab)\" href=\"https:\/\/www.bankofcanada.ca\/2019\/05\/fad-press-release-2019-05-29\/\" target=\"_blank\">held its trend-setting Overnight Lending Rate at 1.75%<\/a> for the sixth time in a row this month, as lingering economic risks such as softness in the oil sector, housing market, and exports, are reason to stick to status quo.<\/p>\n\n\n\n<p>However, the central bank took a decidedly cheery tone in its announcement language, reinforcing policymakers\u2019 beliefs that the Canadian economy will turn around in the second half of the year.<\/p>\n\n\n\n<p>\u201cThe oil sector is beginning to recover as production increases and prices remain above recent lows,\u201d the BoC states. \u201cMeanwhile, housing market indicators point to a more stable national market, albeit with continued weakness in some regions.\u201d<\/p>\n\n\n\n<p>They also point to improvements in job growth as evidence that the sluggish conditions experienced during the first six months of the year were temporary, and that consumer spending and exports will continue to see improvement. Demand for condos and\u00a0<a href=\"https:\/\/www.zoocasa.com\/houses\">houses for <g class=\"gr_ gr_4 gr-alert gr_spell gr_inline_cards gr_disable_anim_appear ContextualSpelling ins-del multiReplace\" id=\"4\" data-gr-id=\"4\">sale<\/g><\/a> <g class=\"gr_ gr_4 gr-alert gr_spell gr_inline_cards gr_disable_anim_appear ContextualSpelling ins-del multiReplace\" id=\"4\" data-gr-id=\"4\">is<\/g> also anticipated to pick up across the country, further supporting the economy.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">U.S.-China Trade Spat Creates Canadian Risk<\/h2>\n\n\n\n<p>However, there are still vulnerabilities present on a global scale, especially as trade tensions ramp up between China and the U.S. \u2013 Canada\u2019s two largest trade partners. This \u201crecent escalation of trade conflicts\u201d is reason for continued caution, though a recent removal of U.S. tariffs on Canadian steel and aluminum will have a positive impact.<\/p>\n\n\n\n<p>Inflation growth, which is the key metric the BoC uses when determining its direction on rates, remains on track, sticking close to its 2% target.<\/p>\n\n\n\n<p>With these factors in mind, the BoC maintains its current stance on rates is warranted, though it\u2019ll keep a \u201cdata-dependent\u201d approach and will remain \u201cespecially attentive to developments in household spending, oil markets, and the global trade environment\u201d when determining its next steps for monetary policy.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Rates to Stay Stable for Remainder of 2019\u00a0<\/h2>\n\n\n\n<p>However, while the BoC is keeping a positive outlook, analysts overwhelmingly do not expect that to translate into an interest rate hike. <br><br>Economist panels polled by Reuters and Bloomberg were both unanimous in expecting no change this month, and for the BoC to hold steady on rates for the remainder of 2019. According to their outlook, there will be no change until at least after the federal election this October and, should the economy continue to underwhelm, that change will be in the form of a rate cut. In fact, 40% of the Reuters economists believe that there will be at least on 0.25% cut before the end of 2020.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What Does This Mean for Your Mortgage Rate?<\/h2>\n\n\n\n<p>While slower economic performance can be cause for concern, it tends to usher in more favourable conditions for borrowers; one of the central bank\u2019s roles is to stimulate the economy in the case of a downturn by keeping the cost of borrowing cheap.<\/p>\n\n\n\n<p>With the BoC on hold for the foreseeable future, that translates to stable interest rates for variable mortgage holders, as Canada\u2019s consumer banks take their pricing cues from the direction of the Overnight Lending Rate. Those with variable-rate mortgages or lines of credit will see no change to their monthly payments, or the proportion of their payments going toward their principal as a result.<\/p>\n\n\n\n<p>It will also be likely that lenders will offer competitive variable-rate options, passing the discount down to borrowers. And, while the BoC rate does not directly impact prices for fixed mortgages, a more accommodative approach to monetary policy will influence the bond market, which lenders use to price their fixed offerings. As bond investors enjoy stable or lower interest rates (its helps preserve the value of their existing investments), yields will continue to drop, prompting the consumer banks to keep rates low.<\/p>\n\n\n\n<p>The\u00a0<a href=\"https:\/\/www.bankofcanada.ca\/core-functions\/monetary-policy\/key-interest-rate\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"next Bank of Canada announcement will be on July 10, 2019 (opens in a new tab)\">next Bank of Canada announcement will be on July 10, 2019<\/a>, along with the release of the next Monetary Policy Report.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Bank of Canada has\u00a0held its trend-setting Overnight Lending Rate at 1.75% for the sixth time in a row this month, as lingering economic risks such as softness in the oil sector, housing market, and exports, are reason to stick to status quo. However, the central bank took a decidedly cheery tone in its announcement [&hellip;]<\/p>\n","protected":false},"author":39,"featured_media":16561,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jnews-multi-image_gallery":[],"jnews_single_post":[],"jnews_primary_category":[],"footnotes":""},"categories":[196],"tags":[],"class_list":["post-16560","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bank-of-canada"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Rate Held in Bank of Canada May Announcement | Zoocasa<\/title>\n<meta name=\"description\" content=\"The Bank of Canada has\u00a0held its trend-setting Overnight Lending Rate at 1.75% for the sixth time in a row this month, as lingering economic risks such as\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, 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