In a statement issued Wednesday, the Bank of Canada announced it will keep the overnight target interest rate at one per cent -- extending the three year trend of low prime interest rates -- and expect it to remain steady until 2015.
“Uncertain global economic conditions appear to be delaying the anticipated rotation of demand in Canada towards exports and investment,” the statement said. “While the housing sector has been slightly stronger than anticipated, household credit growth has continued to slow and mortgage interest rates are higher, pointing to a continued constructive evolution of household imbalances.
"Looking through the choppiness of the recent data, the level of Canada’s GDP is largely consistent with the Bank’s July forecast. The output gap is expected to begin to narrow in 2014.”
The statement mentions the Bank of Canada expects to continue to hold the rate until the market normalizes – good news for those currently locked into variable rate mortgages.
“As long as there is significant slack in the Canadian economy, the inflation outlook remains muted, and imbalances in the household sector continue to evolve constructively, the considerable monetary policy stimulus currently in place will remain appropriate. Over time, as the normalization of these conditions unfolds, a gradual normalization of policy interest rates can also be expected, consistent with achieving the two per cent inflation target.”