September 2015 Interest Rate Announcement

The Bank of Canada has made its September 2015 interest rate announcement. The rate will remain at 0.5%

According to

“Economists had been expecting the bank to keep its trend-setting target for the overnight rate where it is now. A few believe, however, that another cut might be possible later in the year unless the economic picture improves.”

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Bank of Canada Interest Rate Cut

The Bank of Canada interest rate announcement today has lowered the overnight rate to 0.5%.

Just over 50% of analysts surveyed by Bloomberg predicted a drop of 1/4% in the Canada prime rate today.

Check back later today for any updates on Canadian mortgage rates.

From the bank of Canada:

The Bank of Canada today announced that it is lowering its target for the overnight rate by one-quarter of one percentage point to 1/2 per cent. The Bank Rate is correspondingly 3/4 per cent and the deposit rate is 1/4 per cent.

Total CPI inflation in Canada has been around 1 per cent in recent months, reflecting year-over-year price declines for consumer energy products. Core inflation has been close to 2 per cent, with disinflationary pressures from economic slack being offset by transitory effects of the past depreciation of the Canadian dollar and some sector-specific factors. Setting aside these transitory effects, the Bank judges that the underlying trend in inflation is about 1.5 to 1.7 per cent.

Global growth faltered in early 2015, principally in the United States and China.  Recent indicators suggest a rebound in the U.S. economy in the second half of this year, and growth is expected to be solid through the projection. In contrast, China is slowing amid an ongoing process of rebalancing to a more sustainable growth path. This has pulled down prices of certain commodities that are important to Canada’s exports. Financial conditions in major economies remain very accommodative and continue to provide much-needed support to economic activity. Global growth is expected to strengthen over the second half of 2015, averaging about 3 per cent for the year, and accelerate to around 3 1/2 per cent in 2016 and 2017.

The Bank’s estimate of growth in Canada in 2015 has been marked down considerably from its April projection. The downward revision reflects further downgrades of business investment plans in the energy sector, as well as weaker-than-expected exports of non-energy commodities and non-commodities.  Real GDP is now projected to have contracted modestly in the first half of the year, resulting in higher excess capacity and additional downward pressure on inflation.

The Bank expects growth to resume in the third quarter and begin to exceed potential again in the fourth quarter, led by the non-resource sectors of Canada’s economy. Outside the energy-producing regions, consumer confidence remains high and labour markets continue to improve. This will support consumption, which will also receive a fiscal boost. Recent evidence suggests a pickup in activity and rising capacity pressures among manufacturers, particularly those exporters that are most sensitive to movements in the Canadian dollar. Financial conditions for households and businesses remain very stimulative.

The Bank now projects Canada’s real GDP will grow by just over 1 per cent in 2015 and about 2 1/2 per cent in 2016 and 2017. With this revised growth profile, the output gap is significantly larger than was expected in April, and closes somewhat later. The Bank anticipates that the economy will return to full capacity and inflation to 2 per cent on a sustained basis in the first half of 2017.

The lower outlook for Canadian growth has increased the downside risks to inflation. While vulnerabilities associated with household imbalances remain elevated and could edge higher, Canada’s economy is undergoing a significant and complex adjustment. Additional monetary stimulus is required at this time to help return the economy to full capacity and inflation sustainably to target.


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Another Rate Cut Today?

At least one expert is warning against a cut in the Canada prime rate:

The Bank of Canada should hold off cutting interest rates to avoid sending rising home prices even higher, risking a correction later, said the head of Royal LePage, the country’s largest real estate services firm.

“It seems premature to ring the recession alarm bells now, injecting further monetary stimulus,” Phil Soper, chief executive officer of both Royal LePage and its parent company, Brookfield Real Estate Services Inc., said in a report Tuesday. “The country’s all-important real estate market simply does not need a rate cut.”

The Bank of Canada meets Wednesday, and 16 of 29 economists surveyed by Bloomberg forecast it will cut the overnight lending rate by a quarter point, to 0.5 percent. It would be the second reduction this year, pressuring Canada’s lenders to lower their own prime rates, which control the pricing of variable-rate mortgages and other loans.”

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Interest Rate Announcement Today – March 4

The Bank of Canada has kept the prime rate at 0.75% This is not what most analysts were expecting at this announcement. Many had anticipated a drop to 0.5%


“Total CPI inflation in Canada has fallen as expected, reflecting the significant drop in oil prices. Core inflation remains close to 2 per cent and continues to be temporarily boosted by the pass-through effects of the lower Canadian dollar, as well as sector-specific factors.

The global economy is evolving broadly in line with projections in the Bank’s January Monetary Policy Report (MPR). The United States remains the main source of momentum in the global economy, while headwinds to growth linger in many regions. In this context, a growing number of central banks have taken actions to ease monetary conditions. Crude oil prices are close to the Bank’s MPR assumptions.”

Full information here – Bank of Canada

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Lower Interest Rates Tomorrow?

The general consensus among bankers and analysts is that the Bank of Canada will lower the prime rate to 0.5% tomorrow.

If so, that would bring interest rates to the lowest in decades. Anyone with a mortgage or loan due for renewal should benefit greatly from this news.

Check back again tomorrow at 10AM for the Bank of Canada interest rate announcement.

More information on the Bank of Canada can be found here.

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Another Bank of Canada Interest Rate Cut Coming March 4.

The interest rate cut from the Bank of Canada last week came as a surprise to almost all analysts. However, the TD Bank is forecasting a further cut in the Canada prime rate at the next announcement in March 2015.

The current rate is 0.75% and a further cut would drop the bank rate to 0.50%

Here is an excerpt from the TD Economic forecast:

“The Bank of Canada unexpectedly cut the overnight rate by 25 basis points in mid-January, on the negative impact of lower oil prices on inflation and the real economy. At that time, it also signaled that it saw most of the risks to inflation to be tilted to the downside. Given our weaker oil price, inflation, and output forecast relative to the Bank, it therefore holds that we expect some of those downside risks to be realized. As such, we forecast that the Bank of Canada will cut the overnight rate by an additional 25 basis points at its next fixed announcement date in March (Chart 3). The Bank of Canada is subsequently assumed to remain on hold until the second half of 2016. “

Check out the full economic forecast update at

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