Bank of Canada Keeps Historic Low Rates

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Canada’s central bank is keeping its rates at historic lows, however warnings that there are still “significant fragilities” in the economy, despite a recent upswing.

The Bank of Canada’s overnight lending rate will remain at 0.25%, which as you know is effectively the lowest rate possible.

The Bank of Canada was widely expected to keep the low rate in place as part of an effort to provide monetary stimulus to the economy.

The low central bank rates help keep the cost of burrowing low, which make it less expensive for companies and consumers to make purchases.

With the historically low rates, we have see mortgage rates drop to extremely reasonable rates throughout the recession. People begun to borrow more, and in the housing market we saw increases in sales, partly due to the fact that there were extremely low mortgage rates around.

The low rates have done well to help stimulate the economy by keeping the cost of borrowing low. It allowed consumers in particular to still make purchases despite Canada being in a recession.

It is expected that the low rates will stay until the middle of 2010, however this is once inflation keeps at proper levels, with no sudden changes.

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