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Bank of Canada Overnight Interest Rate Stays at 1.75% for July 2019
The Bank of Canada overnight interest rate is remaining the same for yet another month.
On July 10, 2019, the Bank of Canada (BOC) announced the overnight interest rate would stay at 1.75%, the amount it was set at in October of 2018.
The Bank Rate is correspondingly 2% and the deposit rate is 1.5%.
Many economists were not expecting an increase this month, although some were speculating there could potentially be a decrease, particularly after the U.S. Federal Reserve chair Jerome Powell indicated he is prepared to cut rates as soon as next month if the U.S.-China trade dispute is not resolved.
The trade tensions were on the BOC’s mind as well, taking up the first paragraph of the July 10 announcement:
“Evidence has been accumulating that ongoing trade tensions are having a material effect on the global economic outlook,” the BOC stated in its release.
“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.”
However, trade was not the only factor in the BOC’s July 10 decision. The Canadian housing market was mentioned as well, but in a more optimistic light.
“At the national level, the housing market is stabilizing, although there are still significant adjustments underway in some regions,” the BOC stated.
“A material decline in longer-term mortgage rates is supporting housing activity.”
BOC Governor Stephen Poloz recently called for more innovative mortgage products, including longer mortgage terms: https://www.canadianmortgagetrends.com/2019/05/bocs-call-for-longer-mortgage-terms-raises-questions/
Also influencing the July 10 decision were:
- The global GDP. The BOC now expects it to grow by 3% in 2019.
- Canadian economic growth, which the BOC stated appears to be “stronger than predicted” in the second quarter of 2019.
- Exports rebounding in the second quarter and continuing to grow moderately.
Inflation remains around the 2% target.
The next scheduled BOC announcement is set for September 4, 2019. The BOC was vague about whether we will see an interest rate increase, decrease, or hold at that time, citing, again, the trade tensions.
“Recent data show the Canadian economy is returning to potential growth,” the BOC said.
“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.”
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Learn more by calling 1-855-787-8439 or visiting www.purview.ca.« Back to Blog