The International Monetary Fund (IMF) said Monday it sees Canada's central bank holding its overnight rate steady until early 2015, with the bank having limited room to manuevre because of overvalued housing prices, reports Reuters.
After consultations with Canadian officials on the state of the economy, completed in late January, the IMF concluded the Canadian economy will pick up speed in 2014 as exports get a lift from stronger U.S. growth.
The IMF's projections assume the Bank of Canada's overnight target rate will start increasing in "early 2015" and rise to 4 per cent by 2019. Analysts in a Reuters poll conducted just before the bank's January 22 rate announcement predicted the bank's first rate increase would come in the second quarter of 2015.
The bank has kept rates at 1 per cent since September 2010, but last month it revealed a growing concern about chronically weak inflation, prompting some market players to increase their bets on a rate cut at some point this year.
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate