The Bank of Canada has just made it’s 3rd rate decision of 2017. They have decided to hold interest rates at the current level of 0.5% despite surprisingly positive economic growth. Economists widely expected this decision. Rates have remained at rock bottom levels since the 2008 great recession.
Canadian economic data is showing that the Canadian economy is performing better than anticipated throughout the last 6 months. It appears that the economy is back on track after getting hit by the massive plunge in oil prices causing a major rebalancing of our economy. Job growth is strong, wages are increasing, and unemployment is down. Strong demand from consumers, residential investment and investment in the oil and gas sector are primarily responsible for the growth. This is very positive news for Canada as we are growing at higher levels than we have seen in years. In fact we are now leading the G7 for economic growth thus far in 2017.
With all of the positive news, Bank of Canada Governor Mark Carney is remaining cautious as it’s still too early to tell if growth at these levels is sustainable. As a result, he has decided to keep interest rates at current levels. Economists don’t expect rates to change until mid 2018.
This is positive news for the real estate market as historically real estate prices only increase when the economy is growing. Interest rates at the lowest levels seen in our lifetime combined with very strong economic growth only provide a stronger foundation for continued growth in the housing market. The Greater Golden Horseshoe is the economic engine of Canada and poised to reap the most rewards as a result of this data.
The banks next interest rate announcement will be July 12, 2017