Bank of Canada maintains overnight rate target at 1 ¾ percent

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FOR IMMEDIATE RELEASE

Media Relations
613-782-8782
Ottawa, Ontario

July 10, 2019

Available as: PDF

The Bank of Canada today maintained its target for the overnight rate at 1 ¾ percent. The Bank Rate is correspondingly 2 percent and the deposit rate is 1 ½ percent.

Evidence has been accumulating that ongoing trade tensions are having a material effect on the global economic outlook. The Bank had already incorporated such negative effects in previous Monetary Policy Reports (MPR) and in this forecast has made further adjustments in light of weaker sentiment and activity in major economies. Trade conflicts between the United States and China, in particular, are curbing manufacturing activity and business investment and pushing down commodity prices.

Policy is responding to the slowdown: central banks in the US and Europe have signalled their readiness to provide more accommodative monetary policy and further policy stimulus has been implemented in China. In this context, global financial conditions have eased substantially. The Bank now expects global GDP to grow by 3 percent in 2019 and to strengthen to around 3 ¼ percent in 2020 and 2021, with the US slowing to a pace near its potential. Escalation of trade conflicts remains the biggest downside risk to the global and Canadian outlooks.

Following temporary weakness in late 2018 and early 2019, Canada’s economy is returning to growth around potential, as expected. Growth in the second quarter appears to be stronger than predicted due to some temporary factors, including the reversal of weather-related slowdowns in the first quarter and a surge in oil production. Consumption is being supported by a healthy labour market. At the national level, the housing market is stabilizing, although there are still significant adjustments underway in some regions. A material decline in longer-term mortgage rates is supporting housing activity. Exports rebounded in the second quarter and will grow moderately as foreign demand continues to expand. However, ongoing trade conflicts and competitiveness challenges are dampening the outlook for trade and investment. The Bank projects real GDP growth to average 1.3 percent in 2019 and about 2 percent in 2020 and 2021.

Inflation remains around the 2 percent target, with some recent upward pressure from higher food and automobile prices. Core measures of inflation are also close to 2 percent. CPI inflation will likely dip this year because of the dynamics of gasoline prices and some other temporary factors. As slack in the economy is absorbed and these temporary effects wane, inflation is expected to return sustainably to 2 percent by mid-2020.

Recent data show the Canadian economy is returning to potential growth. However, the outlook is clouded by persistent trade tensions. Taken together, the degree of accommodation being provided by the current policy interest rate remains appropriate. As Governing Council continues to monitor incoming data, it will pay particular attention to developments in the energy sector and the impact of trade conflicts on the prospects for Canadian growth and inflation.

Information note

The next scheduled date for announcing the overnight rate target is September 4, 2019. The next full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR on October 30, 2019.

Content Type(s): Press, Press Releases

IMPORTANT NOTICE: Property Taxes & Home Owners Grant Due July 2, 2019

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The deadline for property taxes and to claim your Home Owner Grant (HOG) without penalty is July 2, 2019.

PROPERTY TAXES
You may want to double check if you or your lender are paying your property taxes. If it is you, ensure you have your payment in by July 2, 2019, to avoid penalties. If your lender is paying on your behalf, especially if you are in a new mortgage, you may want to call them directly to ensure they have the correct details for making the tax payment on your behalf. If they don’t have the proper details, it can delay payment and trigger penalties.

HOME OWNER GRANT
July 2, 2019, is also the deadline to claim your Home Owner Grant (HOG). Regardless if you are paying or your lender is paying your property taxes, you are responsible for claiming your HOG. For most municipalities, this can be claimed online in less than two minutes. Google your city/township + home owner grant and a link should be available. You will need your 2019 Property Tax Notice for the FOLIO NUMBER and ACCESS CODE to process your claim.

If you have questions feel free to contact me, or reach out to your municipality or lender to verify the required information.

Irene Strong
778-847-8466
irene@irenestrong.com

Bank of Canada maintains overnight rate target at 1 ¾ per cent

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FOR IMMEDIATE RELEASE

Media Relations
613-782-8782
Ottawa, Ontario

May 29, 2019

Available as: PDF

The Bank of Canada today maintained its target for the overnight rate at 1 ¾ per cent. The Bank Rate is correspondingly 2 per cent and the deposit rate is 1 ½ per cent.

Recent Canadian economic data are in line with the projections in the Bank’s April Monetary Policy Report (MPR), with accumulating evidence that the slowdown in late 2018 and early 2019 is being followed by a pickup starting in the second quarter. The oil sector is beginning to recover as production increases and prices remain above recent lows. Meanwhile, housing market indicators point to a more stable national market, albeit with continued weakness in some regions.

Continued strong job growth suggests that businesses see the weakness in the past two quarters as temporary. Recent data support a pickup in both consumer spending and exports in the second quarter, and it appears that overall growth in business investment has firmed. That said, inventories rose sharply in the first quarter, which may dampen production growth in coming months.

The global economy is also evolving largely as expected since April, although the recent escalation of trade conflicts is heightening uncertainty about economic prospects. In addition, trade restrictions introduced by China are having direct effects on Canadian exports. In contrast, the removal of steel and aluminum tariffs and increasing prospects for the ratification of CUSMA will have positive implications for Canadian exports and investment.

Inflation has evolved in line with the Bank’s April projection. The Bank expects CPI inflation to remain around the 2 per cent target in the coming months. Core inflation measures all remain close to 2 per cent.

Overall, recent data have reinforced Governing Council’s view that the slowdown in late 2018 and early 2019 was temporary, although global trade risks have increased. In this context, the degree of accommodation being provided by the current policy interest rate remains appropriate. In taking future policy decisions, Governing Council will remain data dependent and especially attentive to developments in household spending, oil markets and the global trade environment.

Information note

The next scheduled date for announcing the overnight rate target is July 10, 2019. The next full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR at the same time.

First Time Home Buyers Incentive - Still waiting

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On March 19, 2019 the Government of Canada announced a program, First-Time Home Buyers Incentive (FTHBI), where insured first-time home buyers can purchase through a shared equity mortgage with Canada Mortgage and Housing Corporation (CMHC). A 2019 Budget strategy that is said to support affordable housing for the middle class while easing the pressures on the limited rental supply and rental rates.

A follow up announcement by CMHC on April 4, 2019 provided a bit more insight to the reasons for the program, but offered little as to how the program will be administered. There are still far more questions than answers and the projections as to how many Canadians this program will help, an estimated 100,000, is questionable. With the limits to the household income of $120,000, the mortgage amount capped at four times the household income and a max purchase price of $505,000 including mortgage default insurance, there is only a very small fraction of the market that will be able to qualify or utilize the incentive.

I have held off commenting on this as there is so little information available to comment accurately and fairly on the merits of this plan. It is expected for this program to launch in September 2019 and, I, for one hope to hear more from CMHC over the coming weeks as to how they see this in operation. Understanding how it will impact a borrower’s overall equity, legal costs for set up of this type of mortgage and how the lenders will qualify each applicant are some of the questions needing answers before anyone can consider applying.

As details are released, I will continue to inform.

Bank of Canada maintains overnight rate target at 1 ¾ per cent

FOR IMMEDIATE RELEASE

Media Relations
613-782-8782
Ottawa, Ontario

April 24, 2019

Available as: PDF

The Bank of Canada today maintained its target for the overnight rate at 1 ¾ per cent. The Bank Rate is correspondingly 2 per cent and the deposit rate is 1 ½ per cent.

Global economic growth has slowed by more than the Bank forecast in its January Monetary Policy Report (MPR). Ongoing uncertainty related to trade conflicts has undermined business sentiment and activity, contributing to a synchronous slowdown across many countries. In response, many central banks have signalled a slower pace of monetary policy normalization. Financial conditions and market sentiment have improved as a result, pushing up prices for oil and other commodities. 

Global economic activity is expected to pick up during 2019 and average 3 ¼ per cent over the projection period, supported by accommodative financial conditions and as a number of temporary factors weighing on growth fade. This is roughly in line with the global economy’s potential and a modest downgrade to the Bank’s January projection.

In Canada, growth during the first half of 2019 is now expected to be slower than was anticipated in January. Last year’s oil price decline and ongoing transportation constraints have curbed investment and exports in the energy sector. Investment and exports outside the energy sector, meanwhile, have been negatively affected by trade policy uncertainty and the global slowdown. Weaker-than-anticipated housing and consumption also contributed to slower growth.

The Bank expects growth to pick up, starting in the second quarter of this year. Housing activity is expected to stabilize given continued population gains, the fading effects of past housing policy changes, and improved global financial conditions. Consumption will be underpinned by strong growth in employment income. Outside of the oil and gas sector, investment will be supported by high rates of capacity utilization and exports will expand with strengthening global demand.  Meanwhile, the contribution to growth from government spending has been revised down in light of Ontario’s new budget.

Overall, the Bank projects real GDP growth of 1.2 per cent in 2019 and around 2 per cent in 2020 and 2021. This forecast implies a modest widening of the output gap, which will be absorbed over the projection period.

CPI and measures of core inflation are all close to 2 per cent. CPI inflation will likely dip in the third quarter, largely because of the dynamics of gasoline prices, before returning to about 2 per cent by year end. Taking into account the effects of the new carbon pollution charge, as well as modest excess capacity, the Bank expects inflation to remain around 2 per cent through 2020 and 2021.

Given all of these developments, Governing Council judges that an accommodative policy interest rate continues to be warranted. We will continue to evaluate the appropriate degree of monetary policy accommodation as new data arrive. In particular, we are monitoring developments in household spending, oil markets, and global trade policy to gauge the extent to which the factors weighing on growth and the inflation outlook are dissipating.

Information note

The next scheduled date for announcing the overnight rate target is May 29, 2019. The next full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR on July 10, 2019.

MONETARY POLICY REPORT APRIL 2019