5 March 2014

Economists believe that if you’re a variable mortgage borrower it’s not the time to hurry with switching to a fixed rate.

Another issue of concerns for the central bank is a high level of debts among Canadian consumers.

“The latest reports support the BoC’s forecasts of a soft landing in the real estate market and stabilizing debt-to-income ratios for the Canadians.”

In other words, the Bank has the usual list of focal points: GDP growth, employment and, of course, inflation.

RBC concluded the BoC’s statement by forecasting no rate increases until we can see clearly that the economy and inflation are growing. And today these factors are not so vivid.

In addition to it, the Bank reminded of how unexpected external factors can affect the Canadian interest rates. In this case, we talk about tension in Ukraine. Specialists say that if the situation gets worse, it may have a negative influence on rates.

The next piece of information about rate policy will appear this Friday with the Canadian and U.S. jobs reports. This data is the most volatile and most important for rate changes.

Here are the main facts about the Bank of Canada’s interest rate:

•          Today its key overnight rate is 1.00%

•          Last time the rate changed was September 8, 2010 (42 months ago)

•          The next BoC’s rate meeting is April 16, 2014

•          Today the prime rate is 3.00%

•          The average variable rate is Prime – 0.50%

•          The lowest variable rate is Prime – 0.65%