The Bank of Canada holds at 1.75% on January 9, 2019. The oil shock changes the growth outlook.
The decision at a glance
| Policy measure | Announcement |
|---|---|
| Overnight target | 1.75% |
| Change | No change |
| Bank Rate | 2.00% |
| Deposit rate | 1.50% |
The oil shock changes the growth outlook
The sharp fall in oil prices is the main change since October. Prices are about 25% below the Bank’s earlier assumption, reducing Canadian income and energy investment. Alberta’s production limits help narrow the discount on Canadian oil, but they also restrain output. The Bank now forecasts 1.7% growth in 2019, down 0.4 percentage points from its previous projection, before a recovery to 2.1% in 2020.
Outside energy, the picture is healthier. Employment is strong and unemployment is near a 40-year low. A lower Canadian dollar, the new North American trade agreement and business tax measures should support exports and investment. Housing and consumption are nevertheless weaker than expected as households adjust to mortgage rules, housing policies and higher borrowing costs.
November inflation is 1.7%, partly because gasoline is cheaper, while the Bank’s core measures remain near 2%. The Bank still expects rates to rise over time, but the oil shock creates room to wait. For borrowers, that is a conditional pause: today’s hold should not be treated as a promise that financing costs have reached their peak.
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 9, 2019. The national policy decision does not, by itself, establish a change in Greater Sudbury property values.
For context, compare the December 5, 2018 hold at 1.75% 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