Mortgage shoppers take note: Cheap money is here to stay, at least for the next two years, the Bank of Canada reaffirmed during its interest rate decision on Wednesday.
The BoC had previously provided guidance that rates would remain at their effective lower bound—currently 0.25%—“until 2 percent inflation target is sustainably achieved,” but went a step further this time by providing a specific year.
“The Governing Council will hold the policy interest rate at the effective lower bound until economic slack is absorbed…In our current projection, this does not happen until into 2023,” the Bank’s statement read.
As part of the announcement, the BoC decided to leave its current policy rate at 0.25%, where it’s been since March.
Long Recovery Ahead
While the Bank left its policy rate untouched, it did announce changes to its Quantitative Easing program, whereby the BoC has been purchasing bonds to maintain market liquidity, which has helped keep mortgage rates low.
That bond-buying will be reduced to $4 billion per week from the current $5 billion, and purchases will increasingly shift to longer-term bonds.