![\"\"](\"https:\/\/www.livabl.com\/articles\/wp-content\/uploads\/2019\/10\/bank-of-canada-compressed.jpg\")
<\/a>Photo: James Bombales<\/em><\/p>\nThe pandemic has forced most of us to learn to live with a good dose of uncertainty when it comes to our ability to make even short-term plans.<\/p>\n
But despite being faced with unprecedented challenges brought on by COVID-19, Canada\u2019s central bank still has to confidently make strategic policy choices with an eye to the seemingly distant future.<\/p>\n
So, when the bank said last week during a regularly scheduled announcement that it would not be moving its key interest rate from the current historically low level of 0.25 percent, many read deeper into its language. <\/p>\n\n
Several economists well-versed in parsing its announcements arrived at this conclusion: the bank is comfortable keeping interest rates at their current level until at least 2023.<\/p>\n
At the outset of the pandemic, the Bank of Canada slashed its key interest rate, also known as the overnight rate, several times in quick succession to stabilize the economy. The bank has since signalled that it will not move the rate any lower than the current 0.25 percent level, calling it the \u201ceffective lower bound.\u201d But, it has also said that it won\u2019t be ratcheting the rate back up until certain economic recovery criteria have been met.<\/p>\n
\u201cThe Bank of Canada\u2019s pledge today to keep the policy rate unchanged until the \u20182 percent inflation target is sustainably achieved\u2019 implies that it has no plans to raise interest rates until at least 2023,\u201d wrote Capital Economics\u2019 Stephen Brown in response to the bank\u2019s announcement last week.<\/p>\n
TD Senior Economist Brian DePratto echoed this assessment, noting that the heavy toll the pandemic has taken on the economy and the uncertainty in the months and years to come require the Bank of Canada \u201cto stay in repair mode for some time.\u201d <\/p>\n
While the Bank of Canada rate announcements may not be marked on the calendars of most homebuyers, they play a critical role in determining where mortgage rates are heading in the years to come. Mortgage lenders are sensitive to where the central bank\u2019s key interest rate is moving and adjust their borrowing rates accordingly.<\/p>\n
The current low mortgage rate environment is a major reason why many experts believe Canada\u2019s housing market \u2014 which posted a strong performance in June \u2014 will bounce back relatively quickly from the economic downturn and widespread business shutdowns spurred by the pandemic.<\/p>\n
\u201cAs the real estate market continues to rebound, competitive pressure between mortgage lenders is causing both fixed and variable rates to inch down on a continuous basis,\u201d mortgage comparison site Ratehub.ca shared in an email alert to subscribers following the Bank of Canada\u2019s announcement last week.<\/p>\n
Of course, mortgage rates can only fall so low, but with the Bank of Canada\u2019s forward-looking signalling last week, it\u2019s likely that homebuyers don\u2019t exactly need to rush to take advantage of these rock bottom rates. <\/p>\n
As BMO Senior Economist Robert Kavcic put it in a research note published last week on the bank\u2019s interest rate outlook: \u201cIn case it\u2019s not clear, we\u2019re talking years here, not months or quarters.\u201d<\/p>\n
The heavy toll the pandemic has taken on the economy and the uncertainty in the months and years to come require the Bank of Canada \u201cto stay in repair mode for some time.\u201d <\/p>\n","protected":false},"author":5,"featured_media":205971,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","apple_news_api_created_at":"2020-07-23T13:43:05Z","apple_news_api_id":"b6689f6b-0746-457b-b159-54a30a723617","apple_news_api_modified_at":"2020-07-23T13:43:05Z","apple_news_api_revision":"AAAAAAAAAAD\/\/\/\/\/\/\/\/\/\/w==","apple_news_api_share_url":"https:\/\/apple.news\/AtmifawdGRXuxWVSjCnI2Fw","apple_news_coverimage":0,"apple_news_coverimage_caption":"","apple_news_is_hidden":false,"apple_news_is_paid":false,"apple_news_is_preview":false,"apple_news_is_sponsored":false,"apple_news_maturity_rating":"","apple_news_metadata":"\"\"","apple_news_pullquote":"","apple_news_pullquote_position":"middle","apple_news_slug":"","apple_news_sections":["https:\/\/u48r14.digitalhub.com\/sections\/09b86915-7d2b-3acd-915b-b215002d01b7"],"apple_news_suppress_video_url":false,"apple_news_use_image_component":false,"footnotes":""},"categories":[11269],"tags":[],"coauthors":[8652],"apple_news_notices":[],"yoast_head":"\n