This morning, Wednesday December 3rd 2014, the Bank of Canada announced that its maintaining its target for the overnight rate at 1 per cent. This target has been maintained for more than 4 years, making today's announcement the longest rate freeze in nearly 70 years.
As of late, there has been some speculation in the media that there could be potential rate increase looming in 2015. If rates do rise, most top economists have predicted that they should not rise by more than .50 per cent. In my opinion, there may be some pressure to raise rates if unemployment decreases and consumer confidence builds, translating into increased spending. This is supported by this morning’s press release in which the Bank of Canada stated "stronger exports are beginning to be reflected in increased business investment and employment". Right now we are also seeing cost of crude oil heading towards record lows, which in turn, reduces energy costs for all Canadians. Overall, we should see rates continuing to remain low for an extended period of time.
The next scheduled announcement of the overnight rate target is January 25th 2015.