Bank Of Canada Rate Announcement
James DeVuyst • January 26, 2022
The Bank of Canada is keeping its key interest rate target on hold at 0.25 percent, but warning it won't stay there for much longer.
The trendsetting rate has been at its rock-bottom level since March 2020 during the first wave of the COVID-19 pandemic as the economy went into a downturn and three million jobs were lost.
“Interest rates will need to increase to control inflation. Canadians should expect a rising path for interest rates,” Bank of Canada governor Tiff Macklem said in a statement.
He also pointed to the rapid spread of the Omicron variant as an economic “wild card” at home and abroad to explain why the bank held off on hiking rates Wednesday.
“Our approach to monetary policy throughout the pandemic has been deliberate, and we were mindful that the rapid spread of Omicron will dampen spending in the first quarter. So, we decided to keep our policy rate unchanged today, remove our commitment to hold it at its floor, and signal that rates can be expected to increase going forward,” Macklem said.
CIBC chief economist Avery Shenfeld said he expects the Bank of Canada to raise rates in March if the country gets better news about the Omicron variant.
After today’s announcement, my advice to everyone is that if you have a mortgage coming up in 2022 or 2023 to look at your options now. Penalties will be low if you’re currently in a fixed rate with less than 1 year remaining and it’s also a good time to roll in any debts that are outstanding at lower rates on the mortgage side than unsecured credit lines. If your current variable rate discount is prime – 0.50% or above on your primary residence reach out today since discounts are still prime – 1.20%-1.30% depending on mortgage size.
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