According to the Canadian Real Estate Association, The Bank of Canada is keeping its key policy interest rate at 1 per cent, where it has been held for more than two years. In providing guidance on where interest rates are heading, the Bank said interest rate hikes are “less imminent than previously anticipated."
The Bank acknowledged that Canadian economic growth slowed more abruptly in the second half of 2012 than it had previously anticipated. It also recognized a marked deceleration in the growth of household debt, moderation in the housing sector, and softer than expected inflation.
The bottom line is that economic growth is expected to remain modest but positive, consistent with low inflation and low interest rates. Combined with extremely well anchored expectations for inflation, that means the Bank is in no hurry to raise interest rates anytime soon, with the first such move in that direction unlikely to be for at least another year.