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Bank of Canada Promises Caution in Interest Rate Hikes

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REW.ca
October 25, 2017






Bank of Canada

Central bank holds overnight rate – this time – and will proceed tentatively with future rises

Holding the overnight interest rate steady in its October 25 announcement, the Bank of Canada warned that future rate hikes would be likely, although at a more tentative pace than previously anticipated.

Following two interest rate hikes in July and September at consecutive policy meetings, the central bank said it had decided to hold off with another rate hike – for now. This corresponds with the BC Real Estate Association’s prediction in September that interest rates won’t rise again until 2018.

In a statement Wednesday, the bank said that its “current stance of monetary policy is appropriate” – suggesting that it will continue with its plan to raise interest rates further.

However, the bank added, “While less monetary policy stimulus will likely be required over time, Governing Council will be cautious in making future adjustments to the policy rate.”

The bank said its decision was partly affected by household debt levels, pointing out, “Housing and consumption are forecast to slow in light of policy changes affecting housing markets and higher interest rates. Because of high debt levels, household spending is likely more sensitive to interest rates than in the past.”

The Bank of Canada’s next overnight rate policy meeting is scheduled for December 6.


Joannah Connolly has been editor and content manager of REW.ca since May 2014. Joannah has appeared on major local TV outlets as a real estate commentator, and has moderated and spoken on several industry panels. During this time, she also spent two years hosting the Real Estate Therapist radio show on Roundhouse Radio 98.3FM. A dual Canadian-British citizen, Joannah has 20 years of journalism experience in Vancouver and London, with a prior background in construction, architecture and business media.
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