The Bank of Canada announced July 15, 2015 that it is
lowering its target for the overnight rate by 0.25 percentage points to 0.5 per
cent. In the press release accompanying the decision, the Bank emphasized that
while this additional stimulus is required to help return the economy to full
capacity given a contraction of GDP over the first half of the year,
vulnerabilities associated with household imbalances could edge higher.
Although core inflation remains close to the Bank's 2 per
cent target, growth in the Canadian economy has stagnated. Today's rate cut
should help to partially offset the negative impacts of low energy prices in
the parts of Canada hardest hit by the dramatic decline in oil prices and oil
and gas activity while providing further stimulus to regions like British
Columbia that are enjoying more robust growth. For housing, the impact in
markets like Vancouver or the Fraser Valley that are already experiencing very
strong demand may be relatively muted.
For other markets that been more negatively affected by low energy
prices, including some areas of Northern BC, this may help spur housing demand
Copyright BCREA – Reprinted with Permission
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