Photo: Matthew Grapengieser/Flickr
There were no big shockers in the Bank of Canada’s announcement today that it will keep the overnight rate at 1 per cent. The news holds up the predictions economists made late last year, suggesting the rate would hold steady until at least mid-2015.
Though the central bank noted that the economy has showed some signs of picking up steam with Canadian exports surging, it may be some time before that translates into a boost in “business investment and hiring.”
On a global level, the “recovery in Europe appears to be faltering as the situation in Ukraine weighs on confidence” though the United States appears to be in the clear with the recovery back on track and “business investment now making a significant contribution to growth.”
Real estate remains a worry. While housing activity was “stronger than anticipated,” there are still risk associated with Canadians household debt levels (the central bank used much stronger language in its Financial System Review back in December 2013).
As far as the future, the Bank of Canada was tight-lipped about whether there would be an increase anytime soon, stating “it remains neutral with respect to the next change to the policy rate.”
The rate has remained the same since for about four years, which spurred plenty of talk over Twitter. Here’s how people reacted to the news:
Bank of Canada notes housing market’s head fakes: In July:”data consistent with soft landing” Today:”stronger than anticipated” #WhoKnows
— Jeannie Lee@CBC (@JeannieLee88) September 3, 2014
— Andrew Mayeda (@amayeda) September 3, 2014
Bank of Canada’s neutral pledge is starting to lose credibility with market players | Financial Post http://t.co/SpyWtiM2FV
— Peter Jalkotzy (@Tahoe58) September 3, 2014
NO News is good news! The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. No increase — Mortgage Advisors (@OMAmortgages) September 3, 2014
On WSJ wires: Bank of Canada says in rate statment housing stronger than expected. May suggest BoC becoming worried on real-estate activity
— Paul Vieira (@paulvieira) September 3, 2014