Bank of Canada, Overnight Rate Target Announcement


Release Date: September 10, 2009 Bank of Canada

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Bank of Canada, Overnight Rate Target Announcement

Source: Bank of Canada


The Bank of Canada has announced that its target for the overnight rate will remain at 0.25 per cent and has further reiterated its commitment to hold the overnight rate at this level until the end of the second quarter of 2010. The overnight rate is the rate at which major participants in the money market borrow and lend funds to each other for one day. Other benchmark rates like the prime rate are generally expected to follow the Bank’s decisions to raise or lower the overnight rate target.


Recent economic releases, including those dealing with gross domestic product (GDP) and Consumer Price Index (CPI) inflation have been in line with the Bank of Canada projections released in its July Monetary Policy Report. Renewed economic growth beginning in the third quarter of this year will continue through 2011. This growth will see inflation move back to the Bank’s two per cent target mid-way through 2011. In the second half of 2010, the Bank will look more closely at raising the overnight lending rate from its record low to help ensure that inflation rises in an orderly fashion. Borrowing products, including fixed rate mortgages, have been and will continue to be impacted by the expectation of higher interest rates moving forward. Anticipated changes in borrowing costs obviously influence the decision to purchase a home.
Olivera Mavrak

Olivera Mavrak

CENTURY 21 Heritage Group Ltd., Brokerage*
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