Mortgage Logic

Bank of Canada will hold current level of policy rate until inflation objective is achieved

Yesterday the Bank of Canada (BoC) announced that they would “hold current level of policy rate until inflation objective is achieved”. Inflation is at the low end of their target range (1-3%) in recent months. Excess supply is expected to weigh on inflation over 2021, and as it is absorbed inflation is expected to return sustainably to the 2% target in 2023.

Covid resurgence continues to hamper all world economies with the containment measures that governments are taking. The medium-term outlook for growth has improved with vaccines on the way and monetary support continuing. Fuel prices have increased recently after plunging early in 2020 at the beginning of covid.

In addition, the BoC is maintaining its quantitative easing (QE) program (purchasing debt from FI’s), which continues at its current pace of at least $4 billion per week.

Rates will remain low. The Bank Rate remains at 0.25% and the Prime Rate of interest at major FI’s will remain at 2.45%. For more detailed info please click here: BoC Announcement