Rate Watch Bank of Canada holds key rate at 1%

July 19, 2011

The Bank of Canada holds their key lending rate at 1% for the seventh consecutive meeting. Banks therefore are expected to keep their prime rates at 3%.

The Bank of Canada’s key points:

The global economic expansion is proceeding broadly as projected.
In Canada, the economic expansion is proceeding largely as expected. House hold spending remains solid and business investment robust.
Despite increased global risk aversion, financial conditions in Canada remain very stimulative and private credit growth is strong.
The Bank expects growth in Canada to re-accelerate in the second half of 2011.
Core inflation is now expected to remain around 2% and CPI inflation is expected to return to 2%.

With rates staying low, we are continuing to recommend that clients stay in their variable rate mortgages. The date of the Bank of Canada’s next announcement is scheduled for September 7th, 2011.