The Bank of Canada has made their fourth interest rate decision of 2021, keeping the key interest rate steady at 0.25%. This rate has remained unchanged since March 2020. The Bank of Canada does not project any changes to this rate until the end of 2022. Many factors contribute to this decision, unemployment and inflation are two.
Unemployment is still below pre-pandemic levels, however we are seeing growth. When things open up, employment levels should rise. Right now, it is still very much an unknown.
The Bank of Canada acknowledged that inflation is high right now. It is high because of temporary factors like COVID’s impact. Inflation is expected to remain high to the end of summer, then taper off towards the end of the year.
What does this mean exactly? There are no anticipated changes to the key interest rate until the second half of 2022. For those of you in a variable rate mortgage or a LOC product, this is good news.
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