Today the Bank of Canada (BofC) announced (its fourth of 8 scheduled announcements for the year) that it will not be changing its benchmark key lending rate which directly affects the Prime rate of lending for major FI’s (financial institutions). BofC’s benchmark rate will stay at 0.75% and the Prime rate will likely remain at 2.85%.
BofC has been voicing concerns along with a majority of notable economists that weakness in the U.S. economy raises questions about its underlying strength. Meanwhile inflation tracks on the low side of the BofC’s acceptable bandwidth,
The bottom line is that lending rates will remain low for the foreseeable future. Mortgage Logic believes that the depth of the financial turmoil that occurred post 2007 in the U.S has some years yet to fully unwind from their system, therefore keeping economic growth certainty to a minimum.