Bank of Canada Keeps Prime rate at 1% again!

The Bank of Canada announced today that they are keeping the prime lending
rate at 1%

The Bank said that the reasons for this are:



* inflation is below 2%

* global growth is expected to rise in the next 2 years

* growth in Canada has been improved, but slower than anticipated

* economy is expected to gradually grow towards capacity over next two years

* inflation is expected to remain below target for some time, thus downside risks to inflation have grown in importance and keeping the rate as is will help keep inflation low

The Bank of Canada Prime rate has been at 1% since late 2010, over 3 years

I hope this finds you well,

Mark





This is the full release:



Highlights from the bank of Canada Rate announcement:



Ottawa -

The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

Inflation in Canada has moved further below the 2 per cent target, owing largely to significant excess supply in the economy and heightened competition in the retail sector. The path for inflation is now expected to be lower than previously anticipated for most of the projection period. The Bank expects inflation to return to the 2 per cent target in about two years, as the effects of retail competition issipate and excess capacity is absorbed.

Global growth is expected to strengthen over the next two years, rising from 2.9 per cent in 2013 to 3.4 per cent in 2014 and 3.7 per cent in 2015. The United States will lead this acceleration, aided by diminishing fiscal drag, accommodative monetary policy and stronger household balance sheets. The improving U.S. outlook is affecting global bond, equity, and currency markets. Growth in other regions is evolving largely as projected in the Bank's October Monetary Policy Report (MPR). Global trade growth plunged after 2011, but is poised to recover as global demand strengthens.

In Canada, growth improved in the second half of 2013. However, there have been few signs of the anticipated rebalancing towards exports and business investment. Stronger U.S. demand, as well as the recent depreciation of the Canadian dollar, should help to boost exports and, in turn, business
confidence and investment. Meanwhile, recent data have been consistent with the Bank's expectation of a soft landing in the housing market and a stabilization of household indebtedness relative to income.

Real GDP growth is projected to pick up from 1.8 per cent in 2013 to 2.5 per cent in both 2014 and 2015. This implies that the economy will return gradually to capacity over the next two years.

Although the fundamental drivers of growth and future inflation appear to be strengthening, inflation is expected to remain well below target for some time, and therefore the downside risks to inflation have grown in importance. At the same time, risks associated with elevated household imbalances have not materially changed. Weighing these considerations, the Bank judges that the balance of risks remains within the zone articulated in October, and therefore has decided to maintain the target for the overnight rate at 1 per cent. The timing and direction of the next change to the policy rate will depend on how new information influences this balance of risks.



This is from the papers.....

The Bank of Canada kept its benchmark interest rate steady at one per cent today, continuing its longest stretch of inaction on record.

Canada's central bank last changed its target for the overnight rate in late 2010, when it was raised to its current level. The bank announces its latest policy decision on interest rates every six weeks, and the bank has now stood pat for 26 consecutive policy meetings.

In a statement accompanying Wednesday's decision, the bank said it expects inflation to remain lower than previously anticipated for the next little while. It also said it expects a soft landing in the housing market.

The bank wasn't expected to raise or lower rates on Wednesday, but watchers are closely parsing the statement to gauge which direction the bank is heading in - a rate hike to cool inflation, or a rate cut to stimulate the economy.

Wednesday's statement suggests the bank is leaning toward the former.

The loonie plunged in the immediate aftermath of the news, shedding about a third of a cent to trade at 90.70 cents US.





I hope this finds you Happy and Healthy!

All the Best!

Mark

A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
Providing Full-Time Professional Real Estate Services since 1987
BUS 905-828-3434
FAX 905-828-2829 CELL 416-520-1577
mark@mississauga4sale.com
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