Is the Bank of Canada hinting that we should all have Variable Rate Mortgages? Did you read our last newsletter?.

The Bank of Canada speaks a little differently than we do, so let me translate.

First, they said it by dropping one line that was in all of their reports over the past few years:

“Over time, as the normalization of these conditions unfolds, a gradual normalization of policy interest rates can also be expected…”

 They replaced it with this line: 

“the substantial monetary policy stimulus currently in place remains appropriate”

Then they said they were worried that prices don’t seem to be moving up as they expected despite of all the new money that was printed. Here is how they said that:

“the fact that inflation has been persistently below target means that downside risks to inflation assume increasing importance.”

The Bank of Canada doesn’t think they will have to act to slow growth until at least the end of 2015, which means no movement in the Prime Rate for at least 2 years. Continue reading →