Sunday, January 26, 2014

Bank of Canada rate decision

Bank of Canada kept it’s overnight rate at 1% as expected. Inflation forecasts are lower than previously anticipated so rates will be “lower for longer”. Bank of Canada will not likely begin to raise rates until the later part of 2015. As a result of this dovish stance both the Canadian dollar and bond yields were down yesterday. A lower Canadian dollar will help with exports and the growth of the Canadian economy as a whole. Lower bond yields results in a drop of fixed mortgage rates. This benefits in qualifying clients as the 5 yr fixed rate is used as the qualifying benchmark in many instances.

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