While the East Struggles with Chill and Cold, the Bank of Canada is attempting to keep the economy warm and fuzzy. Good new for Buyers and those carrying a mortgage. Good News Always Welcome! Read On...
The Bank of Canada reduced its forecast for economic growth this year, and said eventual interest-rate increases likely will be delayed.
Policy makers said Canada’s GDP would expand 2 per cent in 2013, compared with an October estimate of 2.3 per cent. GDP likely grew only 1.9 per cent last year, compared with the central bank’s fall expectation of 2 per cent.
The change in outlook reflects Canada’s struggle to find a growth engine to replace a fast cooling housing market. It isn’t large enough to merit lower interest rates, but it is reason enough to keep borrowing costs lower for longer. The BoC stated at the end of its latest policy meeting that the economy now likely won’t grow fast enough to stoke inflation until the second half of 2014, later than previously thought.
Officials opted to leave the benchmark borrowing rate unchanged at 1 per cent, which is where it has remained for over two years, but included language that indicated worry that rising house prices and consumer debt posed a threat to our financial system.
While they indicated that a “modest” withdrawal of monetary stimulus remains likely over time, the BoC concluded that the “more muted inflation outlook and the beginnings of a more constructive evolution of imbalances in the household sector suggest the timing of any such withdrawal is less imminent that previously anticipated.”
(Ken Fadel, CFA, Cresent Mortgage Group)
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