Residential Market Commentary - week of May 29, 2017
May 29, 2017, 13:23 PM
The Bank of Canada has decided to continue its 3-ball juggling act, leaving its benchmark interest rate unchanged for the 15th consecutive setting. Actually, the Bank seems to be juggling 2 balls and a chainsaw: stimulating the economy, keeping the Loonie friendly for exporters and trying to discourage even more household debt.
The overnight rate remains at 0.5%, where it has been since the middle of 2015. Right now many observers expect the Bank will stay on the sidelines until next year.
In the uncharacteristically brief statement that came with the latest setting the BoC cited low inflation and weak wage growth for the decision to leave the rate unchanged. But the Bank also said it expects the U.S. economy to start picking up in Q2. That should help Canadian exporters and could, in turn, lead to a change in interest rate policy.
Of interest to the housing sector, the Bank’s statement – which seemed designed to calm international jitters about potential American trade barriers and worries about a housing collapse – mentioned government efforts to rein-in runaway home prices. While it says the measures “have yet to have a substantial cooling effect on housing markets”, the Bank is hinting that it expects the market will slow down.