{"id":13666,"date":"2019-01-20T03:00:47","date_gmt":"2019-01-20T08:00:47","guid":{"rendered":"https:\/\/lifeinsurance-orleans.ca\/Life-Insurance-Blog\/bank-of-canada-holds-rates-2019-oil-prices-a-big-factor\/"},"modified":"2019-01-20T03:00:47","modified_gmt":"2019-01-20T08:00:47","slug":"bank-of-canada-holds-rates-2019-oil-prices-a-big-factor","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2019\/01\/20\/bank-of-canada-holds-rates-2019-oil-prices-a-big-factor\/","title":{"rendered":"Bank of Canada Holds Rates in First Announcement of 2019; Oil Prices a Big Factor"},"content":{"rendered":"
\n

\"BoC<\/p>\n

In its first announcement of the year, the Bank of Canada decided to hold its overnight rate at 1.75 per cent. It\u2019s also lowering its growth forecast this year for Canada and around the world.<\/p>\n

The Bank gave several reasons for its decision to keep rates steady \u2013 most notably drawing attention to low oil prices and the continuing international trade conflicts, and showing that not much has changed globally since the last announcement. However, this language used in this announcement is quite dovish compared to what we were hearing earlier in 2018. Forecasters are now predicting only two rates hikes this year, even though they previously predicted we would see as many as three rates hikes in 2019.<\/p>\n

Rising interest rates\u00a0and a\u00a0stricter mortgage stress test may have led to a decline in affordability, but if you\u2019re still hoping to move in 2019, this may be your\u00a0time to buy before another interest rate\u00a0hike.\u00a0Find\u00a0the best rates from Canadian lenders and mortgage brokers\u00a0at RateSupermarket.ca today.<\/strong><\/em><\/p>\n

Global outlook is weaker<\/h2>\n

In its statement, the BoC predicted global growth will slow in 2019, pointing particularly to the U.S. \u00a0While the Bank mentioned that \u201cglobal economic expansion continues to moderate\u201d, it also said that growth in the U.S. \u201cremains solid but is expected to slow to a more sustainable pace.\u201d One of the major reasons for this is the growing weight of the U.S.\/China trade conflict on global demand and commodity prices.<\/p>\n

Oil prices are lower<\/h2>\n

The Bank says oil prices are 25 per cent lower than\u00a0it\u00a0assumed in the October Monetary Policy Report (MPR), and this weighs on the decision to hold rates. This drop in global oil prices has had a material impact on the Canadian outlook when it comes to trade and income.\u00a0As such, the BoC\u00a0is expecting, especially in Alberta, that investment in Canada\u2019s oil sector will weaken further throughout the year.
\nBMO Chief Economist Douglas Porter\u00a0says oil was the main theme in the today\u2019s announcement. He adds, \u201cPerhaps the most notable conclusion that energy sector capital spending will drop 12% this year.\u201d<\/p>\n

However, Porter said he remains comfortable with his forecast of two rate hikes later this year, with the first possibly in Q2 and the second in Q4, after October\u2019s federal election.<\/p>\n

No mention of markets<\/h2>\n

What seemed to be missing in the Bank of Canada\u2019s announcement was market pessimism. Despite stock market volatility making headlines for the last two months, there was no mention of the wild swings investors have reportedly experienced in Q4 of 2018.<\/p>\n

The Bank did mention that consumer spending and housing investment has weakened more than expected. This comes as housing markets continue to adjust\u00a0to municipal and provincial measures, changes to mortgage guidelines, and higher interest rates. Moreover, the Bank said it expects household spending to dampen even more this year, possibly due to Canadian investors watching their portfolios and not feeling as confident in their spending.<\/p>\n

However, Canada is still on track for more rate hikes<\/h2>\n

Nonetheless, the Bank maintained a rosy outlook on Canada\u2019s economy, saying it has been performing well overall, growth has been running close to potential, employment growth has been strong and unemployment is at a 40-year low.<\/p>\n

To support continued growth, the BoC is looking ahead to exports and non-energy investments backed up by foreign demand, the terms of the new USMCA trade agreement replacing NAFTA, and a lower Canadian dollar (though the Loonie was reportedly up after\u00a0the rate decision was made this morning).<\/p>\n

However, when it comes to GDP, the Bank now only projects growth by 1.7 per cent in 2019 \u2013 0.4 per cent slower than what it predicted in the October outlook.<\/p>\n

Despite holding rates for now, the Bank did hint at upcoming increases, saying \u201cthe policy interest rate will need to rise over time into a neutral range to achieve the inflation target.\u201d<\/p>\n

Inflation, which is the Bank\u2019s core mandate, remains in focus as \u201ccore inflation measures remain clustered close to two per cent. As expected, CPI inflation eased to 1.7 per cent in November, due to lower gasoline prices.\u201d \u00a0And inflation is expected to edge lower to below two per cent through much of 2019.<\/p>\n

The next scheduled announcement of the overnight rate target is March 6, 2019. The Bank\u2019s next full outlook update on the economy and inflation, including risks to the projection, will be published in its MPR on April 24, 2019.<\/p>\n

The post Bank of Canada Holds Rates in First Announcement of 2019; Oil Prices a Big Factor appeared first on MoneyWise.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

In its first announcement of the year, the Bank of Canada decided to hold its overnight rate at 1.75 per cent. It\u2019s also lowering its growth forecast this year for Canada and around the...<\/p>\n","protected":false},"author":578,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/13666"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/578"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=13666"}],"version-history":[{"count":0,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/13666\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=13666"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=13666"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=13666"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}