As expected, the Bank of Canada held the Overnight Lending Rate at 1 percent.
With previous rate announcements, the BoC kept hinting that our economic engine was engaged and interest rates were ready to go up. Yesterday’s surprise was that the BoC seemed to back-pedal and say, "Oooops, we overestimated economic growth, rates won’t be going up anytime soon."
But we already knew that rates would stay low. At the end of last year, the U.S. Fed. announced it would continue its low-rate strategy until at least 2014. With our two economies closely linked, Canadians were comfortable that our rates would hold steady as well.
While the BoC positioning for continued low rates may seem unduly negative – there should be some happiness in "steady as it goes" for mortgage interest rates.