The Bank of Canada left its target for the overnight rate unchanged at 1.75 per cent this morning. In the statement accompanying the decision, the Bank noted that the slowdown over the past two quarters was temporary and growth should pick up beginning in the second quarter of 2019. On inflation, the Bank expects that both total CPI and core inflation will remain near its 2 per cent target in coming months. Overall, the Bank judges its current level of monetary accommodation as appropriate.

Slow growth in the first half of 2019, the result of reductions in Alberta oil production, global trade uncertainty and the continued impacts of the B20 stress test, has likely pushed out any possibility of further tightening by the Bank of Canada into next year at the earliest. In fact, if financial markets are to be believed, the Bank may have missed its chance to return its policy rate to its preferred or "neutral" level and the next move may even be a rate cut. Canadian mortgage rates have responded strongly to revised market expectations for Canadian monetary policy, with 5-year mortgage rates falling back to 2017 levels. Those lower rates are already providing a boost to sales in May and should continue to do so through the summer. 

Copyright British Columbia Real Estate Association. Reprinted with permission.