BoC rate decision comes in

BoC rate decision comes in

BoC rate decision comes in The Bank of Canada has lowered its overnight rate to 1/2 per cent.

“The lower outlook for Canadian growth has increased the downside risks to inflation. While vulnerabilities associated with household imbalances remain elevated and could edge higher, Canada’s economy is undergoing a significant and complex adjustment,” the central bank said in a statement. “Additional monetary stimulus is required at this time to help return the economy to full capacity and inflation sustainably to target.”

Prior to the decision economists were split on what move the central bank would make, with 16 of 29 economists polled by Bloomberg forecasting the central bank would slash the overnight rate by a quarter point to 0.5 per cent.

The market was ripe with speculation building up to the announcement, with analysts suggesting a rate drop would have little economic impact because rates were already extremely low.

Brokers suggested a slight lowering of rates would have little effect, except to perhaps attract stragglers to the enticing low rate environment – assuming, of course, that lenders follow the Bank of Canada’s lead.

The Bank of Canada expects real GDP to grow by just over one per cent this year and about 2 ½ per cent in 2016.

“The Bank’s estimate of growth in Canada in 2015 has been marked down considerably from its April projection. The downward revision reflects further downgrades of business investment plans in the energy sector, as well as weaker-than-expected exports of non-energy commodities and non-commodities,” the Bank said. “Real GDP is now projected to have contracted modestly in the first half of the year, resulting in higher excess capacity and additional downward pressure on inflation.”

  • Yaletown Mortgage Loans 2015-07-15 10:29:58 AM
    Canadians will be facing even higher debt loads now on top of higher real-estate prices in the metropolitan centres. Eventually the party will come to an end. Save your cash now and by significant lower real-estate in a few years.
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  • Jesse D 2015-07-15 10:49:02 AM
    This really is not a positive sign for Canadians as a whole. Just another sign of a potential recession that's been called since mid-2013. Europe, we're becoming a lot like you...dictatorship from the Wynne and Harper government, doing away with the middle class, debt loads most people cannot afford primarily due to companies paying low salaries and the only non-public sector jobs are minimum wage Tim Horton's jobs. No offence to those working for Tims. All levels of government have failed us.
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  • Ron Butler 2015-07-15 10:52:51 AM
    Wonder how much our banks will drop? 15 bps like last time or maybe just 10 bps? We will wait and see.
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