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<\/a><\/p>\nThe Bank of Canada announced it would maintain the key interest rate at one per cent, despite previously warning that a rate hike was inevitable.<\/p>\n
In the same monetary policy report<\/a>,\u00a0released Wednesday by Governor Stephen Poloz, the central bank tempered its outlook for economic growth to 1.6 per cent this year, 2.3 per cent in 2014 and 2.6 per cent in 2015 before \u201creaching full capacity around the end of 2015.\u201d<\/p>\n The central bank\u2019s bias toward rate hikes have been in place since April 2013, but in the wake of Wednesday\u2019s surprise announcement, market experts say the bank is just as likely to cut the rate in the future as they are to hike it.<\/p>\n As for Canada\u2019s housing market, the central bank maintains there is still a risk of a correction, stating in the 35-page report:<\/p>\n \u201cThe elevated level of household debt and stretched valuations in some segments of the housing market remain an important downside risk to the Canadian economy. The continued slowing in household credit growth and the rise in mortgage interest rates point to a gradual unwinding of household imbalances. However, recent data suggest some risk of renewed momentum in the housing market. This would provide a temporary boost to economic activity, but could exacerbate existing imbalances and therefore increase the probability of a correction later on.”<\/p>\n So, \u2018go easy on the borrowing,\u2019 remains the bank’s message to the consumer. But as the Globe and Mail points out<\/a>, this is a warning the bank expects the consumer to heed:<\/p>\n The central bank still says in the most recent report that \u201chousehold imbalances are expected to unwind gradually,\u201d its lingo for consumers pulling back. And Governor Stephen Poloz said today that he doesn’t see a correction in the absence of a global economic shock. Most economists, too, project a soft landing for the market.<\/p>\n But the central bank is still on alert.<\/p><\/blockquote>\n