The Bank of Canada holds at 1.50% on September 5, 2018. A 3% inflation reading is not the whole decision.
The decision at a glance
| Policy measure | Announcement |
|---|---|
| Overnight target | 1.50% |
| Change | No change |
| Bank Rate | 1.75% |
| Deposit rate | 1.25% |
A 3% inflation reading is not the whole decision
July CPI reached 3%, higher than expected, partly because of an unusual rise in airfares. Core inflation remains near 2%, and the Bank expects the headline measure to move back toward target as temporary effects, including earlier gasoline increases, fade. It holds rather than respond mechanically to the latest headline.
Canadian GDP grows at an annualized 2.9% pace in the second quarter after 1.4% in the first, closely matching the Bank's outlook. Business investment and exports continue to expand despite choppy data and trade uncertainty. Housing is stabilizing, credit growth is moderating and the household debt-to-income ratio is beginning to decline.
The Bank still expects higher rates to be needed and is watching NAFTA negotiations and the effect of previous increases. That is a cautious policy outlook, not a promise of unchanged mortgage costs. For buyers and owners approaching renewal, the useful preparation is to compare current terms and payment scenarios while keeping a margin for non-mortgage housing expenses.
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, September 5, 2018. The national policy decision does not, by itself, establish a change in Greater Sudbury property values.
For context, compare the July 11, 2018 increase to 1.50% 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