Bank of Canada Rates Hold Steady

Bank of Canada Rates Steady- November 2021 by Tammy Dufault

In its interest rate announcement for this calendar year, the Bank of Canada kept its policy rate at 0.25%. 

The Bank also revealed that it will be closing its bond buying program (known as quantitative easing), ending that form of monetary support that it has been providing to the financial system.

The Bank sees the global economic recovery from the pandemic as progressing steadily. Amid strong demand, growth is however still being held back by pandemic-related disruptions to the production and transportation of goods globally. This, along with higher energy prices, has led to inflation picking up in many countries.

Domestic economic conditions indate that strong economic growth has resumed in Canada. Labour market conditions are improving.

All things considered, the Bank has as a result forecast the Canadian economy to expand by 5% this year before moderating to 4.25% and 3.75% in 2022 and 2023 respectively. The Bank anticipates high demand will be driven by strong consumption and business investment, with housing activity expected to remain upbeat, supported by higher incomes and low borrowing rates.

The Bank stated that it plans to kepp its policy rate at the current lower level until around mid-2022. The first rate hike will likely be in the spring or summer of next year.

The Bank of Canada's next rate announcement is scheduled for December 8, 2021.

Source of information: The Canadian Real Estate Association