The rate will very likely remain at a standstill until the end of 2013, suggest bank watchers, now parsing through the rate review.
The Bank of Canada is blaming the standstill on “economic activity in the third quarter,” which was weaker “owing in part to transitory disruptions in the energy sector.”
That situation isn’t expected to change rapidly, say analysts, suggesting investors may be among those best positioned to take advantage of the low rates, even as first-time buyers are shut out of the market because of new mortgage rules.
Still, all Canadians will have to grapple with uncertainty in the short-term, says Mark Carney, governor of the Bank of Canada. He points to the financial situation south of the border, especially with the recent discussion of the U.S. and its ongoing fiscal cliff negotiations.
If that scenario unfolds, interest rates in Canada would likely plummet, as the Bank moves to shore up economic activity against possible recession.
It’s a worst-case scenario for investors as well, compromising rental affordability.
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