Bank of Canada Holds Interest Rate

BCREA ECONOMICS NOW


Bank of Canada Interest Rate Announcement - May 30, 2018

The Bank of Canada decided to leave the target for the overnight policy rate unchanged at 1.25 per cent this morning. In the statement accompanying the decision, the Bank noted that inflation has been close to its two per cent target and will likely be higher in the near term than was previously forecast due to higher gasoline prices. Economic growth in the first quarter was stronger than expected due to rising exports and business investment, which helped to offset a B20 induced softening in housing activity.  Overall, the Bank's view is that higher interest rates will be warranted to keep inflation near its target.
   
Although the Bank held steady today, with inflation rising to the Bank's two per cent target and the Canadian economy operating at or near capacity, interest rates are very likely headed higher,  perhaps at the Bank's next meeting in July.  That will translate to higher mortgage rates which, combined with the erosion of purchasing power from the mortgage stress test, will continue to temper housing demand in 2018.

For more information, please contact: 

Cameron Muir

Brendon Ogmundson

Chief Economist

Deputy Chief Economist

Direct: 604.742.2780

Direct: 604.742.2796

Mobile: 778.229.1884

Mobile: 604.505.6793

Email: cmuir@bcrea.bc.ca

Email: bogmundson@bcrea.bc.ca



The British Columbia Real Estate Association (BCREA) is the professional association for more than 20,000 REALTORS® in BC, focusing on provincial issues that impact real estate. Working with the province’s 11 real estate boards, BCREA provides continuing professional education, advocacy, economic research and standard forms to help REALTORS® provide value for their clients.


Real estate boards, real estate associations and REALTORS® may reprint this content, provided that credit is given to BCREA by including the following statement: “Copyright British Columbia Real Estate Association. Reprinted with permission.” BCREA makes no guarantees as to the accuracy or completeness of this information.

 

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