Canadian Housing Activity Picking Up While BOC Interest Rate Stays the Same
The Bank of Canada (BOC) interest rate is remaining at 1.75% for another month.
On October 30, 2019, the BOC announced that the overnight interest rate will go unchanged. The Bank Rate is correspondingly 2% and the deposit rate is 1.5%. The interest rate has stayed the same for a full year — the last change was in October of 2018.
However, within the Oct. 30 announcement is positive recognition of Canadian housing activity — the BOC stated that it is on the rise.
“Consumer spending has been choppy, but will be supported by solid income growth,” the BOC stated. “Meanwhile, housing activity is picking up in most markets.”
While this is good news, the BOC was cautious in its estimation.
“The Bank continues to monitor the evolution of financial vulnerabilities in light of lower mortgage rates and past changes to housing market policies,” it stated.
Factors that affected the decision to hold interest rates for another month focused mainly on the global economy.
“The outlook for the global economy has weakened further since the Bank’s July Monetary Policy Report (MPR),” the BOC stated.
Trade conflicts and global uncertainty is “restraining business investment, trade, and global growth,” the BOC said.
They also acknowledged the decision by other countries to change their monetary and other policy measures, including interest rate cuts by the U.S. Federal Reserve. The BOC said Canada has been affected by these developments — specifically commodity prices have fallen. However, the Canada-U.S. exchange rate is still near the July level and the Canadian dollar has strengthened against other currencies.
Read the full BOC announcement here: https://www.bankofcanada.ca/2019/10/fad-press-release-2019-10-30/
The next BOC interest rate announcement is scheduled for December 4, 2019. The BOC will be keeping a close eye on consumer spending and housing activity as “sources of resilience” in the Canadian economy.
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