The Bank of Canada has announced that the current interest rate of 1% will stay in effect.
This was expected due to the continuing economic problems especially in the Eurozone countries.
According to Derek Holt and Karen Cordes Woods at Scotia Capital, “We are not expecting any major shifts in the BoC’s thinking … especially given that Carney just spoke on Nov. 23 and given last week’s co-ordinated central bank funding intervention, with the overnight rate expected to remain at 1 per cent. Indeed, even the markets are not pricing in a cut any more”.
The C.D. Howe Institute’s Monetary Policy Council released a recommendation last week.”The C.D. Howe Institute’s Monetary Policy Council (MPC) today recommended that the Bank of Canada maintain its target for the overnight rate, the very short-term interest rate the Bank targets for monetary policy purposes, at 1.00 percent at its next announcement on December 6, 2011. The risks that Europe’s fiscal problems pose to the international financial system and the world economy are so severe that the MPC called for the Bank’s overnight rate to stay at 1.00 percent through the end of 2012.”
What does this mean for Canadian mortgage rates? According to Ratesupermarket.ca, fixed interest rates, while at almost historic lows, could go down further.
“With fixed mortgage rates near historic lows in Canada, one might think they can’t possibly get any lower. Wrong. According to RateSupermarket.ca’s Mortgage Rate Outlook Panelfor December 2011, we may see fixed mortgage rates decrease in the short term.
The panel also believes that variable mortgage rates will stay at current levels given that no change is expected from the upcoming Bank of Canada rate announcement on December 6th.
Fixed mortgage rates: Down
With no quick fix on the horizon for the European debt crisis, the global economic outlook continues to be pessimistic causing downward pressure on longer term bond yields. Couple this with decreased demand for home loans during the busy holiday season, and it is likely that fixed mortgage rates will stay low or even drop further over the next 30-45 days.”
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