We are finally in June, and that means a lot of things; school is soon to end, letting out all of the kids into the wild, which is summer.
But that aside, the more important thing that happened so far in this month is that the Bank of Canada has announced that they will be keeping its benchmark interest rate steady at 1%. In case you forgot (doubt you did) but this has been the same level since September 2010. That is right, we are almost at the 2 year mark, with no chance in the benchmark interest rate.
The Bank of Canada announced that it would be holding its target for the overnight rate in the latest policy decision on Tuesday. The Bank Rate is 1.25% and the deposit rate is 0.75%.
They have decided to once again not do anything to the rate; this rate is what other banks base their interest rates on.
This has been the longest since the Bank of Canada has kept the rate on hold since the 1950s.
Why was the rate unchanged?
The fact is, the deterioration in the outlook for global economic growth has greatly put down any thoughts that were brought up in the last meeting. This deterioration is taking place because of the worsening of the European government debt crisis.
Personally, I am sure we all anticipated this happening; there is always something causing the rates to be held, but I do not actually see it as a huge problem. Canada has fared much better than other countries, and when you think about it, we have a great banking system (it is in fact rated among the best in the world) and we had no mortgage meltdown.
If the Bank of Canada is being over cautious to some people, then by all means; I simply mean that I would rather be cautious taking a step at a time than jumping head first without thinking.
The next meeting is scheduled for July 17th, 2012; the Bank of Canada may increase rates, however at their current track record and how the markets are, I do not see this happening.
What do you think of the Bank of Canada holding the rate?