Bank of Canada maintains overnight rate

The Bank of Canada announced this morning that it will maintain its target for the overnight rate at 0.75 per cent -- a move that many in the real estate industry had been expecting.

Sal Guatieri, senior economist at BMO Capital Markets, predicted to CREW yesterday that he expected the bank to pause today before cutting rates again in April. The next BoC announcement is due on April 15.

This latest announcement follows the BoC's first interest rate cut in four years. On January 21, the bank cut its overnight rate target by a quarter of a percentage point to 0.75 per cent.

The move surprised the industry, which had been predicting a rise in interest rates in 2015.

The bank said that economic growth in Canada in the fourth quarter of 2014 was consistent with its expectations. It stated: "The oil price shock had a modest early impact on aggregate demand, and a larger effect on income.

"The bank continues to expect that most of the negative impact from lower oil prices will appear in the first half of 2015, although it may be even more front-loaded than projected in January.

"Nevertheless, data for 2014 as a whole suggest the anticipated rotation into stronger growth in non-energy exports and investment is well underway.

The bank also said that the risks around the inflation profile are now more balanced and financial stability risks are evolving as expected in January.

"At present, we judge that the current degree of monetary policy stimulus is still appropriate and the target for the overnight rate remains at 3/4 per cent."


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