The Bank of Canada held their latest rate meeting March 18th and as widely expected decided to hold the overnight rate steady at 2.25%. Although there was virtually no chance of a rate hike, many people holding variable mortgages and lines of credit were rooting for a cut.
Some factors that would likely have been taken into consideration in making this decision, were that inflation has been well under control and has actually fallen lower than the target of 2%. The other primary factor would have been the continued softening of the Canadian economy.
In the US, there is much pressure for the FED to cut their overnight rate as well, however they are following the same tact, holding tight for the time being.
It appears that the Bank of Canada is hesitant to decrease the overnight rate in the near future, in fear that they might need to use potential rate cuts later this year, or heading into next year to help stimulate the Canadian economy if it continues to soften further.
The best scenario is if inflation continues to be within control, the economy strengthens and the Bank of Canada can enact some rate cuts later this year.
We will all have to keep our fingers crossed!
Mark