Canadian economic bandage remains with the bank of canada maintaining the overnight rate and quantitative easing keepin the overnight prime & variable rates steady fixed rates could rise

BOC Economic Bandage Continues

In Bank of Canada by Vancouver Mortgage Broker

Overnight interest rates were held again today by the Bank of Canada (BOC) as was the Quantitative Easing program of $2 billion in purchases per week.

The BOC states:

“The global economic recovery continued through the second quarter, led by strong US growth, and had solid momentum heading into the third quarter. However, supply chain disruptions are restraining activity in some sectors and rising cases of COVID-19 in many regions pose a risk to the strength of the global recovery. Financial conditions remain highly accommodative.”

“In Canada, GDP contracted by about 1 percent in the second quarter, weaker than anticipated in the Bank’s July Monetary Policy Report (MPR). This largely reflects a contraction in exports, due in part to supply chain disruptions, especially in the auto sector. Housing market activity pulled back from recent high levels, largely as expected. Consumption, business investment and government spending all contributed positively to growth, with domestic demand growing at more than 3 percent.”


The Bank will continue providing a bandage with low interest rates to help the economy heal.  The BOC is aiming to get inflation to it’s 2% target.  Currently CPI inflation remains above 3% and the BOC’s forecasting for inflation to come more into alignment in the second half of 2022.  If this happens then variable rate mortgages could see a small increase but that is a big if.  The current debt piled economy would need to continue to improve without any surprises.  It’s opinion that fixed rates are likely to increase first as the Bank of Canada reduces it’s Quantitative Easing bond buying program and we are likely to see this increase in the near future.  Variable rate increases will lag with the earliest forecast being for the end of 2022.  Now is an opportune time for a mortgage and debt management review with many mortgage rates still available under 2%.