Today was the first monetary policy meeting of the year. As was widely expected, the January 2020 Bank of Canada meeting opted to hold its key interest rate at 1.75 per cent. Keeping it unchanged for a 10th-straight meeting and leaving Canada with the highest rate among advanced economies.
Canada charting its own course
While the global trend has been to cut interest rates over the past 18 months, here in Canada things are a little different. The resilience of our economy has allowed us to chart our own course when it comes to monetary policy. Strong domestic numbers include:
- Core inflation on target at ~2%
- Great job market figures
- Housing rebound in major markets which leads to elevated household debt
You can read the Bank of Canada’s full press release here.
Will 2020 see a drop in the prime rate?
The jury is out on whether we’ll see a rate cut this year. When polled this week 9 out 17 chief economists expect a rate cut by June.
We’ll likely have a wait and see attitude from the BoC. If domestic numbers start to slide in the first few months of 2020 they certainly would react to lower the overnight rate.
You can check out our current rates here.
What does today’s decision mean to you?
The overall story is status quo. The retail prime rate offered by your lender will remain unchanged at 3.95%.
Next Bank of Canada meeting will be Wednesday March 4th 2020.
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