This morning the Bank of Canada held its key lender rate at 1.75%.

Since July 2017 Canada’s Central Bank has raised its overnight rate five times. Wednesday’s announcement was welcome news for variable rate holders. Whether it’s a mortgage, home equity line of credit, personal line of credit, student line of credit, even a savings account, you are affected by the ups and downs of this key interest rate.

This week, you can breathe a little easier, at least for now.

With the news that the bank downgraded its expectations for the Canadian economy this year, they are taking a slightly more dovish stance on interest rates.

The head of the Central Bank, Stephen Poloz, said “The policy interest rate will need to rise over time into a neutral range to achieve the inflation target.” He said “neutral”, in his mind, was between 2.5% and 3.5%. But he quickly followed that with he won’t know we’re there until we reach it. Not overly reassuring news for Canadians trying to make financials decisions that affect their cash flow and retirement.

I found the comments by CIBC Economist Avery Shenfeld, in this CBC article, echoed my feelings. As the January announcement loomed closer, odds of another interest rate increase fell. The rationale provided by Poloz on Wednesday, however, was interesting.

While talk that further increases are necessary continues, as above, the message on Wednesday didn’t indicate “when it will come off the sidelines and hike again”.

For now, be prepared to hold on tight. The roller coaster ride isn’t over and I expect we’ll see more mixed messages as the year progresses.

If you were looking for clarity from this announcement, sorry to disappoint!

If you want to know how future hikes could impact you, give me a call – 403-804-7002!