BCREA ECONOMICS NOW: Bank of Canada Interest Rate Announcement - October 23, 2012
BCREA ECONOMICS NOW
Bank of Canada Interest Rate Announcement - October 23, 2012
The Bank of Canada once again opted to hold its target for the overnight
rate at 1 per cent this morning. Interest rates have been held constant for
over two years, the longest such period since the 1950s. The Bank
somewhat tempered its bias for higher future interest rates, including a softer
statement regarding the appropriateness of a gradual withdrawal of monetary
stimulus as excess supply in the economy is absorbed. In a bit of a
surprise, the Bank actually raised its forecast for the growth in the Canadian
economy this year to 2.2 per cent, but kept its 2013 forecast at 2.3 per cent
growth. The Bank judges that at that pace of growth, the Canadian economy will
return to full capacity by the end of 2013.
It is our view that monetary policy at the Bank of Canada will continue to be
constrained by external events in the global economy and household debt growth
at home. While the Bank's preference for tighter policy is clear, it is
difficult to make a case for higher interest rates when core inflation is below
the Bank's 2 per cent target and already slow economic growth is threatened by
global uncertainty. Therefore, we are forecasting that the Bank of Canada will
hold its target overnight rate at 1 per cent until mid-to-late 2013 when,
conditioned on an improved global economic outlook, it may test the water
with a 25 basis point rate increase.
For more information, please contact:
Cameron Muir |
Brendon Ogmundson |
Chief Economist |
Economist |
Direct: 604.742.2780 |
Direct: 604.742.2796 |
Mobile: 778.229.1884 |
Mobile: 604.505.6793 |
Email: cmuir@bcrea.bc.ca |
Email: bogmundson@bcrea.bc.ca |
BCREA represents 11 member real estate boards and their approximately 18,000 REALTORS® on all provincial issues, providing an extensive communications network, standard forms, economic research and analysis, government relations, applied practice courses and continuing professional education (cpe).
Real estate boards, real estate associations and REALTORS® may reprint this content, provided that credit is given to BCREA by including the following statement: “Copyright British Columbia Real Estate Association. Reprinted with permission.” BCREA makes no guarantees as to the accuracy or completeness of this information.
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