Bank of Canada Governor Mark Carney keeps the rate unchanged at 1% as expected by many analysts. As the economic data coming out from the US, European Union, China and Canada all signal some sort of slow down or lower than expected growth, it’s no wonder he had to maintain the course.
Despite repeating his message that personal debt levels are too high and we should be cautious about taking on too much debt, no one seems to be listening. The Toronto housing market continues its frenzy pace of setting new records all the while builders continue to add more units to the market.
In addition, despite recent reports of some people paying off or trying to pay off their credit cards, many are still using their line of credit or home equity line of credit to fund additional investments and personal purchases.
However the Bank of Canada cannot keep the current rate at this historical low forever because of inflationary pressures. While some are expecting this rate to stay into 2013, it would all depend on the global economic recovery, if any otherwise we might even see this low rate push further into early 2014. But trying to predict what will happen in two years time is like looking into a crystal ball.
This is probably one of the few times in history where if you have the opportunity to investment we see this as an excellent time to do so because waiting on the sideline to see what will happen between in the short-term will leave you missing out on the action.