MORTGAGE TRENDS: Short-term rates stay put
By Contributor
Canada’s key interest rate will end 2011 unchanged.
The Bank of Canada (BoC) left its policy rate at 1.00 percent this week, as anticipated.
In a statement, the Bank said European economic performance will be worse than expected, Canadian and United States growth are “slightly” better than expected, and inflation will “ease.”
It added: “With the target interest rate near historic lows and the financial system functioning well, there is considerable monetary policy stimulus in Canada.”
Following the announcement, BMO economist Doug Porter told the Financial Post, “…I don’t really sense much of a change at all in the bank’s overall view.”
The bond market, which leads fixed mortgage rates, apparently agrees. Yields changed very little in reaction to the BoC’s decision. (5-year bond yield quote)
The next BoC rate meeting is January 17, 2012. As of today, financial markets are pricing in a 10 percent chance of a rate cut at that meeting and 90 percent chance of no change, according to Bloomberg.
By Robert McLister, Editor, CanadianMortgageTrends.com
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