The chance of a “micro-cut” to the Bank of Canada’s overnight rate has increased due to the economic impact of the coronavirus pandemic. Industry experts are anticipating a cut of less than 25 basis points. The lower the overnight rate is, the less expensive it is for consumers to borrow money.
The potential decrease in the rate is due to the need for more widespread financial stimulus to the Canadian economy, says Andrew Kelvin, chief Canada strategist at TD Securities.
A micro-cut like this has not occurred since the implementation of the overnight rate in February 1996. A cut to the overnight rate could increase spending, as seen in the boost to the Canadian housing market due to historically low borrowing costs.
The delayed rollout of the COVID-19 vaccine as well as the decline in jobs are the main factors of a slow Canadian economy in 2021. The Bank of Canada’s next rate announcement is January 20th at 10:00 AM. As always, stay connected on our Facebook and Instagram for housing market updates and trends.
ORIGINAL SOURCE: mortgagebrokernews.ca