BoC Rate Announcement June 9 2021

KEY PONTS

• As expected the Bank of Canada announced this morning that it will be maintaining its overnight interest rate at 0.25% keeping the retail prime rate at 2.45%

• The bank is staying on track with the original plan of a slow stable post-pandemic recovery by continuing to use the Quantitative Easing program as well as leaving rates unchanged.

• The Bank of Canada is projecting that there will be a rate increase in the second half of 2022 once inflation reaches a stable 2%

THE OVERNIGHT RATE REMAINS UNCHANGED

Today the Bank of Canada met for the fourth time in 2021 to review the overnight interest rate. As expected the bank has decided to maintain the key interest rate at 0.25%. This also means that the retail prime rate will remain unchanged at 2.49%.

The bank's decision to keep interest rates constant was partially based on the lockdowns in the first half of the year causing a higher unemployment rate along with slow economic growth.

The housing market was only briefly mentioned in today's report and it appears as though the bank has no intention of interfering at this time stating " Housing market activity is expected to moderate but remain elevated."

Even with the troubles of the third lockdown, the Canadian economy is recovering at a pace the bank projected back in April. They also admitted that the economy is moving in the right direction however the BOC is committed to a slow careful recovery.

What does this mean for your rates?

• The retail prime rate will remain unchanged at 2.45% and your monthly payment on your mortgage or lines of credit will not change.

• The Bank is still projecting the next potential rate increase within the second half of 2022

Should you convert your variable rate mortgage to a fixed rate?

Should you switch to a fixed rate? The short answer to this question is not at this time! There are currently not enough signals to indicate that switching to a fixed-rate mortgage would be a benefit at this time.

If you are in a variable rate mortgage with a discount of -60 or less refinancing may be an option to save money.

If you would like to talk about your specific situation please click here and let's set up a time to talk!

THE NEXT RATE ANNOUNCEMENT DAY IS JULY 14!