The Bank of Canada holds at 0.25% on October 27, 2021. Bond buying ends as inflation looks more persistent.
The decision at a glance
| Policy measure | Announcement |
|---|---|
| Overnight target | 0.25% |
| Change | No change |
| Bank Rate | 0.50% |
| Deposit rate | 0.25% |
Bond buying ends as inflation looks more persistent
The Bank ends quantitative easing and moves to reinvestment: it will replace maturing Government of Canada bonds rather than keep expanding its holdings. The policy rate stays at 0.25%. This is a meaningful withdrawal of additional support, but it is different from selling the existing bond portfolio or immediately increasing the overnight rate.
Canadian growth is forecast at 5% in 2021, 4.25% in 2022 and 3.75% in 2023. Consumption and employment recover, while manufacturing shortages, transportation bottlenecks and hiring difficulties limit how much the economy can produce. The Bank judges that the gap between demand and available capacity is probably smaller than it expected in July, even though some labour-market weakness remains.
Energy prices and supply disruptions are stronger and more persistent than expected. Inflation is now projected to remain elevated into next year before easing toward 2% by late 2022. The Bank brings its projected timing for absorbing unused capacity forward to the middle quarters of 2022. For borrowers, the direction of policy is changing, but the next rate decision still depends on incoming evidence.
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, October 27, 2021. The national policy decision does not, by itself, establish a change in Greater Sudbury property values.
For context, compare the September 8 hold at 0.25% 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