On July 15th, the Bank of Canada announced that it would lower its target overnight lending rate to 0.50 per cent from 0.75 per cent.
According to the Bank, it’s estimate of growth in Canada for this year has come down considerably from projections in April, but growth is expected to resume in the third quarter of 2015.
“Outside the energy-producing regions, consumer confidence remains high and labour markets continue to improve,” said the Bank. “This will support consumption, which will also receive a fiscal boost.”
The Canadian Real Estate Association said in a press release, “Recall that when the Bank of Canada previously cut interest rates by a quarter of a percentage point in January, Canada’s largest private banks lowered their lending rates by less than that. The same will likely hold true this time around. Accordingly, the Bank of Canada’s most recent interest rate cut is unlikely to cause consumer borrowing and mortgage lending to catch fire, especially given the currently high level of household debt.”