News: Vancouver Real Estate Market

BCREA on Bank of Canada Interest Rate Announcement

The Bank of Canada opted to hold the Bank's target rate at 1 per cent this morning.  Market volatility over the summer and incoming data indicating very weak economic growth has prompted an abrupt change in the policy stance at the Bank of Canada. Whereas just a few short weeks ago it was widely expected that interest rates were set to rise this fall, those rate hikes have been pushed out, possibly to as far as next summer.  The major economies of the world are dangerously close to slipping into recession over the next 12-months. European sovereign debt combined with short-sighted stabilization policy and misguided austerity measures are threatening to destabilize world credit markets as interest rates in the peripheral states of the Eurozone spiked on default concerns. Meanwhile political acrimony in the United States is only further damaging an already deeply troubled economy.


In light of a slower global economic growth profile and heightened financial and credit market uncertainty, the Bank sees a diminished need to withdraw monetary policy stimulus. Given the current fragility of the global economy, we no longer expect the Bank of Canada to raise interest rates this year and anticipate moderate monetary tightening beyond the second quarter of 2012. 

Copyright British Columbia Real Estate Association. Reprinted with permission.


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