HomeLife Salmon Arm Realty Steven Lewis

December 3, 2014 - Bank of Canada Interest Rate Announcement


Wednesday, December 3, 2014

Bank of Canada Interest Rate Announcement - Dec 3, 2014


The Bank of Canada announced this morning that it is holding its target overnight rate at one per cent. This marks the longest period without a change in the Bank’s policy rate since the 1950s. In the statement accompanying its decision, the Bank noted that inflation has been stronger than expected in the past year, though mainly due to temporary factors. The Bank also stated that slack in the Canadian economy appears to be lower than projected in October due to upward revisions to growth as well as a broadening Canadian economic recovery. The Bank cited falling oil prices and household financial imbalances as key risks to its outlook. 

Perhaps the most pressing development for the Canadian economy, and therefore monetary policy, is the recent downturn in oil prices. Untangling the macroeconomic consequences of declining oil prices can be complex for an oil-producing country like Canada. However, the recent decline in oil prices will likely be felt strongest on growth through decreased output in the oil and gas industry and on inflation through lower prices for energy products, particularly gasoline.  This suggests a delay in inflation returning to the Bank's 2 per cent target. We expect the Bank will begin slowly raising its overnight rate, starting late next year with perhaps a 25 basis point increase. That should translate to modestly higher mortgage rates in 2015.

For more information, please contact: 

Cameron Muir Brendon Ogmundson
Chief Economist Economist
Direct: 604.742.2780 Direct: 604.742.2796
Mobile: 778.229.1884 Mobile: 604.505.6793
Email: cmuir@bcrea.bc.ca Email: bogmundson@bcrea.bc.ca

BCREA represents 11 member real estate boards and their approximately 18,000 REALTORS® on all provincial issues, providing an extensive communications network, standard forms, economic research and analysis, government relations, applied practice courses and continuing professional education (cpe).

Real estate boards, real estate associations and REALTORS® may reprint this content, provided that credit is given to BCREA by including the following statement: “Copyright British Columbia Real Estate Association. Reprinted with permission.” BCREA makes no guarantees as to the accuracy or completeness of this information.

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Steven Lewis -

Steven Lewis

#404 - 251 Trans-Canada Hwy NW
Salmon Arm BC V1E 3B8
lewis.steven@shaw.ca

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