It's another hold, the Bank of Canada (BoC) announced today.
For the sixth time in a row, the central bank told Canadians it would be holding its interest rate steady at 2.25%.
In its announcement, the BoC said, "Canada’s economy is showing signs of improvement. Growth is picking up and inflation is projected to ease gradually from its recent spike. There are still important risks and uncertainties related to the war in the Middle East and US trade policy."
How does a rate hold impact Canadian borrowers?
The BoC interest rate is a benchmark financial institutions use to set interest rates on lending products, such as mortgages and other types of loans.
Those with variable rate mortgages, or other variable rate products, would see their interest rate fluctuate should the BoC cut or hike its rates. When the BoC holds, their interest rate usually does not change.
Those with fixed rate mortgages have their interest rate locked in for the duration of their mortgage term, so the BoC's regular announcements don't influence their current interest rate.
Why is the Bank of Canada holding its interest rate again?
Not much has changed in the economy since the last Bank of Canada announcement on June 10, explained TD Economist Maria Solovieva.
She thinks the BoC is continuing to assess how recent developments could affect the Canadian economy — including where oil prices might go (which have come down from their recent peaks) and ongoing trade uncertainty between Canada and the United States.
The economy still has "slack," she said, meaning there is spare capacity or room for the economy to grow because businesses are operating below their full potential and there are more workers available than employers need. In other words, businesses have room to increase production without running into widespread shortages or supply constraints, she said.
While economic slack might sound negative, Solovieva said it also gives the BoC more flexibility.
Because the economy still has spare capacity, the recent energy-price shock has so far remained relatively contained rather than leading to widespread inflation, or increased prices across the board. This allows the BoC to keep rates unchanged while evaluating how these competing forces evolve.
The next BoC announcement is slated for September 2.