In a move that was more or less expected amongst economists, the Bank of Canada (BoC) has opted to hold its policy interest rate steady at 5%. Governing Council said in a statement weighing the potential risks to inflation, they felt it “appropriate” to maintain the policy rate at this time.
“Inflation could be higher if global tensions escalate and this boosts energy prices and further disrupts international shipping (…)We don’t want to leave monetary policy this restrictive longer than we need to. But if we lower our policy interest rate too early or cut too fast, we could jeopardize the progress we’ve made bringing inflation down.” – BoC Governor Tiff Macklem.
“I realize that what most Canadians want to know is when we will lower our policy interest rate. What do we need to see to be convinced it’s time to cut?” Macklem later said. “The short answer is we are seeing what we need to see, but we need to see it for longer to be confident that progress toward price stability will be sustained. The further decline we’ve seen in core inflation is very recent. We need to be assured this is not just a temporary dip.”
While there is a lot of chatter and various predictions regarding the Bank of Canada policy rate, from “backseat driver’s” to major bank economists and whether it’s educated guesses or tea leaves – the reality is that many predictions have been wrong in the past, and only the time will tell.
Meanwhile, the lowest 5-year fixed mortgage rate declined slightly to 4.79% in March. Make sure to consult with a mortgage broker if your current mortgage is up for a renewal. Send me a message if you need recommendations, I’ll be happy to help.