The Bank of Canada held their lending rate steady today, stating “the cumulative effects of the persistent strength in the Canadian dollar and Canada’s poor relative productivity performance are restraining this recovery in net exports and contributing to a widening of Canada’s current account deficit to a 20-year high.” This along with “a significant source of uncertainty” from the worldwide market is keeping our Prime rate at 3%.
At the same time, measures introduced Monday by Finance Minister Jim Flaherty to clamp down on household debt, by making it harder for people to take on more obligations than they can afford, will likely give the central bank more flexibility to wait until it makes sense to raise rates throughout the economy rather than doing so to discourage a small subset of borrowers.
Governor Mark Carney hinted that if he could raise rates he would. Most economists are expecting the next increase to come in the second quarter.
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