Bank of Canada holds interest rates at 3%, Prime rates stay at 4.75%

The Bank of Canada decided to hold interest rates at 3% this morning. Many people had expected at least a 25 basis point reduction due to the slowing of economic growth and the high risk of higher inflation as energy and food prices continue to increase.

The Financial Post reports:

“If current levels of energy prices persist, total CPI inflation will rise above 3% later this year. However, with the Canadian economy operating in excess supply, core inflation is expected to remain below two per cent through 2009. Both total and core inflation should converge on 2% in 2010 as the economy returns to balance,” the bank said.

The bank’s decision could be bad news for consumers and businesses.

Traditionally, commercial banks follow the central bank’s lead with matching cuts to their benchmark prime rates, now at 4.75%, to which floating-rate consumer and business loans, including mortgages, are linked.”

On we’ve seen a few changes to Canadian mortgage rates as the popular variable closed rate with a 2.24% 3 month teaser rate has been pulled, and the best 1 year fixed closed rate decreased from 6.05% to 6% offered by DUCA for mortgage shoppers in Ontario, while it remains at 6.05% with Manulife Bank for the rest of Canada.

Related Topics

Economic News / Mortgage News / Mortgages

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