The Bank of Canada holds at 1.75% on January 22, 2020. The Bank is testing whether the slowdown will last.
The decision at a glance
| Policy measure | Announcement |
|---|---|
| Overnight target | 1.75% |
| Change | No change |
| Bank Rate | 2.00% |
| Deposit rate | 1.50% |
The Bank is testing whether the slowdown will last
Canada’s late-2019 weakness is larger than the Bank expected in October. It estimates fourth-quarter growth at an annualized 0.3%, followed by 1.3% in the first quarter of 2020. Exports fall, business investment appears softer and job creation slows. Consumer confidence and spending are also weaker than expected, although residential investment remains comparatively solid.
Strikes, difficult weather and inventory adjustments explain some of the slowdown. The harder question is whether weaker global conditions are affecting Canada more deeply. Households are saving a larger share of income, which can restrain spending while also reducing financial vulnerability. The Bank forecasts Canadian growth of 1.6% this year and 2% in 2021, supported by population growth, incomes and improving foreign demand.
Inflation remains around 2%, and wages continue to strengthen despite the recent loss of momentum. The Bank therefore holds while watching consumption, housing and investment closely. The decision is a balance between near-target inflation and a widening gap between actual activity and what the economy could produce—not a guarantee that mortgage rates will remain unchanged all year.
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 22, 2020. The national policy decision does not, by itself, establish a change in Greater Sudbury property values.
For context, the Bank held at 1.75% in its December 4, 2019 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