Bank of Canada Maintains Its Overnight Rate at 0.5%

The Bank of Caanda says our economy appears to be achieving a growth rate of 2.5% during the first quarter, which is stronger than expected. However, the Bank does not expect this rate of growth to continue in the second quarter. The decrease in demand for natural resources will result in a slower economic growth. Fiscal spending announced in the recent Federal budget will have a positive effect on the economy.

The Bank forecasts the economy will grow 1.7% this year and 2.3% next year and 2% in 2018. this suggests a return to a 2% target for inflation over the same time frame.

If economic growth and job creation continue to surprise on the upside then the Bank may begin to raise rates toward the end of 2017 and potentiall see mortgage rates rise toward the end of this year, in anticipatio of tighter monetary policy

April 13, 2016

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