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The Bank of Canada said in its monetary policy report Wednesday that it isn’t changing its overnight rate from the current one per cent, but it’s not saying much else.
It’s a line Canadians have heard since September 2010 — the last time the bank altered the key lending rate — and holds up economists’ past predictions that the rate would hold steady until at least mid-2015.
When speaking to what the future holds for rate changes, however, the bank dropped its reference to a “neutral” bias that it’s used in past statements and instead opted for a less declarative observation that “the balance of risks falls within the zone for which the current stance of monetary policy is appropriate.”
On housing, the bank said activity “has been more robust than anticipated, buoyed by continued very low mortgage rates and exhibiting strength beyond a rebound from weather-depressed levels earlier in the year.”
It noted, however, that while Eastern Canada shows “signs consistent with a soft landing,” the housing markets in major cities in Ontario, Alberta and British Columbia “are generally robust and much tighter.”
“While a good part of the strength can be explained by favourable demographics and strong employment gains in parts of the country, it nonetheless suggests that household imbalances could increase further,” the report said.
Economists suggest the bank’s limited guidance indicates it feels zero urgency to do anything with rates, either up or down.
“The mixed messages suggest heavily that the Bank of Canada is perfectly content waiting on the sidelines for another year (and possibly longer),” said BMO Chief Economist Douglas Porter.