In a decision that didn't come as a surprise, the Bank of Canada today announced the decision to hold its key rate at 1 percent.
While Canada rebounded from the global economic crisis much faster than its biggest trading partner – the United States, the sputtering U.S. economy is a major influence on the central bank’s reassessment of our forecast.
A rebound in housing markets was among the factors that helped drive Canada out of the economic crisis. Housing sales too are cooling off; but, thanks to historically low interest rates, September activity remained stable in about two thirds of markets, according to the Canadian Real Estate Association.
The Canadian dollar weakened against the U.S currency in response to the bank’s economic forecast. This is good news for sectors whose job growth relies on U.S. investment and trade.
Job security weighs heavily on Canadian homebuyers’ decisions to commit to long-term investments such as mortgages. Despite the tendency of recent economic news to cast a pall on the outlook for job stability, it isn’t all bad news. Statistics Canada’s recent Labour Force Survey reports that overall employment in the country was up by 349,000 from September 2009 – a 2.1 percent increase. Average hourly wages also increased slightly.
We are recovering, albeit slower than we would like. It is interesting to see how Canada’s central bank rate decisions compare to those in world markets.