The Bank of Canada holds at 0.50% on January 18, 2017. Canada's spare capacity sets it apart from the United States.
The decision at a glance
| Policy measure | Announcement |
|---|---|
| Overnight target | 0.50% |
| Change | No change |
| Bank Rate | 0.75% |
| Deposit rate | 0.25% |
Canada's spare capacity sets it apart from the United States
The Bank projects 2.1% Canadian growth in both 2017 and 2018, with full capacity around mid-2018. Employment is improving, but labour-market indicators still show substantial room to grow. The resource-sector adjustment appears largely complete, although the loss of income and wealth continues to affect spending.
US policy uncertainty complicates the outlook. The Bank includes initial assumptions about prospective US tax changes, but the broader policy picture is unsettled. Higher global bond yields have already lifted Canadian yields, while currency strength creates additional challenges for Canadian exporters. Housing-finance changes and higher mortgage rates are expected to restrain residential investment.
Core inflation is below 2%, reflecting spare capacity. The Bank expects headline inflation to approach target as energy prices rise and food-price declines fade. Holding at 0.50% leaves support in place for an economy that is not in the same position as its US neighbour. For a Canadian mortgage borrower, neither US rate headlines nor an unchanged Bank target can substitute for checking the actual offer.
What this means for a mortgage
The overnight target influences short-term borrowing costs, including lender prime rates. Variable mortgages and home-equity lines of credit are more directly exposed to prime-rate changes. Fixed mortgage offers also depend on bond yields, funding costs, the term and lender competition; they can move even when the Bank holds.
Put the announcement into a Greater Sudbury plan
Buying or renewing
Ask for written figures using your balance, down payment and amortization. Compare payment mechanics, prepayment options, penalties and the cash left after closing. A variable mortgage with fixed payments may change how much principal you repay instead of changing the payment immediately; the contract determines the result.
Preparing to sell
Financing affects what buyers can carry, but it does not set one price for every home. Compare recent sales and active alternatives in the same neighbourhood and price range. Condition, carrying costs, presentation and offer terms remain central to the decision.
Official announcement: Bank of Canada, January 18, 2017. The national policy decision does not, by itself, establish a change in Greater Sudbury property values.
For context, compare the December 7, 2016 hold at 0.50% with today’s decision.
For a local plan, explore the Buyer Experience or Seller Experience.
Expect Moore for Your Real Estate.
— Chad Moore, REALTOR®
— Lake City Realty Ltd., Brokerage