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Bank of Canada Interest Rate Announcement

Posted by Justus Edmundson on 04 June 2014

The Bank of Canada announced this morning that it is maintaining its target for the overnight rate at 1 per cent. In its accompanying statement, the Bank noted that total CPI inflation has reached its 2 per cent target sooner than the Bank had forecast due to higher energy prices and a lower Canadian dollar. On economic growth, the Bank expects an improvement in exports in the second half of the year as well as strengthening business investment and a soft landing in the housing market. The Bank judges that the balance of risk in the Canadian economy is weighted modestly to downside risk to inflation.
Inflation in Canada has started to move materially higher in recent months, driven by a substantial increase in energy costs. At the same time, the Canadian economy has posted disappointing growth due to slowing household spending and a drag on exports from weakness in the United States. However, as the Bank noted in its statement, there are good reasons to believe that both of these trends will prove temporary. Much of first quarter economic weakness was due to unusually severe winter weather which kept consumers at home and construction projects delayed. As the weather warms up, we anticipate a rebound in growth in the second quarter. As for inflation, the impact of higher energy prices on headline CPI should fade in coming months and the Bank has already suggested it will look past the transitory increase in inflation. However, there does seem to be some underlying momentum in core CPI, which if sustained will be much harder for the Bank to ignore. For now, we anticipate the Bank will remain in neutral, leaving rates unchanged until 2015.

For more information, please contact:
Cameron Muir Brendon Ogmundson
Chief Economist Economist
Direct: 604.742.2780 Direct: 604.742.2796
Mobile: 778.229.1884 Mobile: 604.505.6793
Email: cmuir@bcrea.bc.ca
Email: bogmundson@bcrea.bc.ca

The British Columbia Real Estate Association (BCREA) is the professional association for more than 18,500 REALTORS® in BC, focusing on provincial issues that impact real estate. Working with the province’s 11 real estate boards, BCREA provides continuing professional education, advocacy, economic research and standard forms to help REALTORS® provide value for their clients.
Real estate boards, real estate associations and REALTORS® may reprint this content, provided that credit is given to BCREA by including the following statement: “Copyright British Columbia Real Estate Association. Reprinted with permission.” BCREA makes no guarantees as to the accuracy or completeness of this information.

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Justus Edmundson

Article By Justus Edmundson

I have worked in many areas of finance and mortgages including Personal Loans and Mortgages as well as retail financing. Through all of these positions I was able to attain my dream to help people in the process of buying or selling a home.

I am proud to work alongside the dedicated professionals at RE/MAX of Nanaimo, and have personally sold over 280 properties thus far.

For a complete biography and more, check out the About Page.

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