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Bank rates unchanged - Jan 16 2007
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Bank rates unchanged - Jan 16 2007
The Bank of Canada announced today it will keep its overnight lending rate unchanged at 4.25%. The overnight rate is the key lending rate for the central bank and affects a broad range of sectors in the national economy.
In Real Estate terms, the key rate announcement is generally proceeded by either a decrease or increase (if not a continuation) of mortgage rates offered by the leading financial institutions and banks. This latest announcement ensures that, at least for the short term, mortgage rates will stay relative and no increase is foreseen.
According to the Bank of Canada, 2006 has seen inflation fall within expected parameters and forecasts for 2007 show an economic increase of about 2.5% for the first half of the year.
“There are signs that a significant amount of the adjustment in the U.S. housing and automotive sectors has already taken place and that the inventory correction in Canada is well advanced.â€
Furthermore, this announcement marks continued confidence by the Bank of Canada that housing, and as a result the Canadian Real Estate Market, will maintain its forward momentum in 2007. We should continue to see strong sales and sustained demand for homes in the upcoming year.
This announcement was in no way a surprise, as it was expected by many analysts. According to the Globe and Mail:
“The central bank was widely expected to stand pat Tuesday and rates aren’t expected to move any time soon, analysts said.â€
For more information, please read the press release by the Bank of Canada and the Globe and Mail Article.
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January 16th, 2007
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