The Bank of Canada announced today that it will be holding the line on any Bank interest rate changes at this time. With a slower Canadian economy (projected GDP growth of 1.5%) vs. the US (projected GDP growth of 2.8%), seek there is definitely a divergence in trend between the U.S. and Canada. The Bank Rate will remain at 0.5% and the Prime Rate of interest with major FI's should remain at 2.7%.
It would be handy for the BOC to lower the bank rate right now, considering the sluggish economy, but that would lead to other economic problems because of the depth in value that the Canadian dollar has fallen. The BOC does not want the value of the Canadian currency to further decline. This could lead to inflationary effects that would be difficult to battle while attempting to stimulate the Canadian economy.
Soft and falling oil and resource prices have thrown the Canadian economy into a tizzy that remains. Manufacturing, exporting and consumer spending on domestic goods and services will be the only significant ways to fuel economic growth moving forward, unless OPEC (Organization of Oil Exporting Countries) has a change of heart and immediately reduces world oil supplies.
At this point we do not anticipate interest rate increases for 2016. Pricing on interest rates may vary slightly between FI's and may soften as the Spring arrives, but overall stability in interest rates should continue.
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