At 10:00 am EST, Wednesday December 2nd, the Bank of Canada maintained their overnight rate at .5% and there are no changes to the interest rate on your Variable Rate Mortgage, Line of Credit and/or Student Loans at this time. At Dominion Lending Centres, we are fortunate to have our own Chief Economist, Dr. Sherry Cooper. Sherry is an award-winning authority on finance and economics with over 30 years of bringing economic insights and clarity to Canadians. Here is an excerpt of the announcement today and her outlook on the Canadian economy and what to expect for 2016:
“The Bank of Canada kept the key overnight interest rate unchanged at 0.5% as expected, as the Federal Reserve is poised to hike rates for the first time in nearly 10 years. The Bank’s decision did not however, reflect complacency with the state of the Canadian economy, bur rather a hand-off to the much ballyhooed fiscal stimulus in the coming year by the new Liberal government. With interest rates so close to the zero lower bound, it’s a good thing that firepower will be coming from another source. This is no time for misplaced fiscal austerity. If anything, the risk is that the government won’t do enough to reboot economic activity, paranoid about looming deficits and the erroneous assumption that tax hikes for the rich will somehow help the economy or address income inequality.
The Canadian economy, though improved from the first-half rout, is on very shaky ground. The third quarter GDP figures released this week showed a rebound to a 2.3% annual growth pace, largely the result of an improvement in exports – not surprising given the robust demand for autos in the U.S and the weakness in the Canadian dollar. But the September data for GDP by industry was very troubling as real gross domestic product fell 0.5% following three consecutive monthly increases, primarily as a result of declines in mining, quarrying and oil and gas extraction and, to a lesser extent, manufacturing weakness.”
To read the full article from Dr. Sherry Cooper, please click here.
Remember, that any increase to the prime rate since 1992 has only been by 0.25% at any ONE time, so likely you won’t see a large significant increase all at once. Prime rate remains at 2.70% and fixed rates have increased just a little since the last announcement, and are around 2.64% to 2.89% for a five year fixed term.
Based on this recent announcement, and the anticipation that the prime rate will still remain low for a while now. This is the final announcement from Bank of Canada for 2015 on any changes to the prime rate, the next announcement will be held on January 20, 2016.
