The Bank of Canada announced on May 25th, 2016 that it was keeping its trend-setting target overnight lending rate at 0.5 per cent.
The announcement repeated many of themes from its announcements and Monetary Policy Reports (MPRs) published in late 2015 and early 2016, with the overall economic outlook evolving largely as the Bank projected in its April MPR. Chief among these themes is how the Bank is still counting on stronger U.S. economic growth to buoy Canadian exporters amid ongoing weakness in Canadian business investment and hiring intentions.
The Bank indicated it expects that recent wildfires in Alberta will cause the Canadian economy to shrink slightly in the second quarter and then rebound in the third as oil resumes production and reconstruction begins in affected communities.
With inflation largely in line with the Bank’s expectations and the economy continuing its uneven adjustment the Bank of Canada is likely to keep interest rates on hold well into 2017.
As of May 25th, 2016, the advertised five-year lending rate stood at 4.64 per cent, unchanged from both the previous Bank rate announcement on April 13th and from one year ago.
The next interest rate announcement will be on July 13th, 2016, with the next update to the Monetary Policy Report released on the same day.