As of their December 5th announcement, the Bank of Canada will stand pat on the overnight rate currently at 1.75%. 

“The global economic expansion is moderating largely as expected,” they said, “but signs are emerging that trade conflicts are weighing more heavily on global demand… there are upside as well as downside risks around trade policy. To put it simply: lets wait and see.

How does this affect home owners? The Bank’s overnight rate directly influences the PRIME rate, which currently sits at 3.95%.  If you don’t have one already, it’s a good idea to switch to look into a variable rate mortgage.

The Bank isn’t likely to raise rates again at their next meeting in January. How can we be so sure? Economists agreed that we wouldn’t see a hike this month and the common consensus is that we won’t see one next month either. “Looking ahead to January, the [Bank of Canada] will likely need to be convinced to hike (rather than not to hike), so we’ll need to see a solid run of data and oil prices at a minimum hanging in there,” said Derek Holt, Scotiabank economist.

How long can we expect to see interest rates sit still? That depends on how development in domestic and world-wide economics pan out. It all depends on how the global and domestic economies roll forward. TD Bank analyst Brian DePratto says changes aren’t likely. “We no longer expect the Bank of Canada to hike its policy interest rate in January,” he said. “Spring 2019 now appears to be the more likely timing, allowing for the Bank to ensure that the growth narrative is back on track.”

For more information on PRIME rate and your mortgage, please contact me, Josh, at 403-241-3255