April 24 was the latest Bank of Canada announcement. To no one’s surprise, they left the key lending rate unchanged. The bigger news was their position change on future increases. Great news to all the variable rate holders out there!

With the Canadian Economy slowing, the Bank of Canada abandoned its projections for rate hikes in 2019. Most analysts are forecasting interest rates to remain on hold indefinitely. “As the economy copes with headwinds that brought Canada’s economy to a near halt over the past six months”, according to this article.

While the Bank of Canada (BoC) is maintaining its current forecasts for economic growth in 2020, most analysts believe their position on this will also change in time.

David Doyle, North American economist and Canadian market strategist at Macquarie Group, goes into more detail about why, in this BNN Bloomberg interview.

Interesting that following the announcement, Poloz still indicated that he believe a hike is more likely than a cut. Not everyone agrees.

“Still, the basic narrative is that while Canada is in a period of slower-than-expected growth, officials continue to see many of the factors — trade conflicts, adjustments in both the housing market and the oil industry — as temporary.

“The energy sector has been grappling with the impact of low oil prices and pipeline constraints, while the global economic slowdown and continued trade tensions are weighing on investment and exports outside of the oil sector, the Bank of Canada said. Housing activity and consumption have also been weaker than expected.”

The next rate announcement is set for May 29. We don’t expect to see any movement in the key lending rate. However we’ll be watching closely to see if there is any change in position surrounding future hikes.

Stay tuned!