At 10:00 am EST, yesterday, the Bank of Canada left its target overnight rate unchanged at 0.5% percent — unchanged since July 2015, which in essence means no change to the interest rate on your Variable Rate Mortgages, Line of Credit, and/or Student Loans. The Bank, however, sharply reduced its forecast for second quarter Canadian growth owing to the devastating wildfires in Alberta.

Here is an excerpt of the announcement and what they had to say about yesterday’s decision:

“The Bank’s economists estimate that the fire-related damage and shutdown of oil production will reduce the current quarter’s inflation-adjusted GDP growth by 1-1/4 percentage points, likely taking growth down to negative territory. I expect growth to decline by -1.0% in the second quarter with a substantial bounce back in Q3 as recovery and reconstruction commence.

The Canadian economy started the year with surprising strength, but business investment and intentions were disappointingly weak. Although oil prices have edged upward on supply disruptions to near $50 a barrel for West Texas Intermediate, the Canadian economy’s adjustment to the mid-2014 oil price plunge remains slow and uneven.

Core inflation continues to be near the 2.0% target as the past decline in the Canadian dollar puts upward pressure on imported products, which has been largely offset by the deflationary effect of excess capacity. Hence, the Bank sees no reason to change the target overnight rate at this time”.

For the full rate announcement, please click here.

Based on this recent announcement, and the anticipation that the prime rate will still remain low for a while now unless you feel otherwise, I’d recommend that you remain with your current variable rate product as the interest is lower than most fixed term rates at this time. Most lenders have also reduced the discounts on Variable Rate Mortgages which at one time was available as low as Prime minus 1%, most Variable Rate Mortgages today are priced around Prime minus .20 to .30% today. If having a fixed rate is important to you, call me so I can calculate what your new payment would look like and also if it is suitable for you. The next scheduled date for announcing the overnight rate target is 13 July 2016.