{"id":15479,"date":"2020-05-01T11:11:00","date_gmt":"2020-05-01T18:11:00","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=15479"},"modified":"2020-04-20T09:59:17","modified_gmt":"2020-04-20T16:59:17","slug":"boc-maintains-the-lowest-overnight-rate-at-0-25-new-bond-programs-aimed-at-bolstering-economic-recovery","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2020\/05\/boc-maintains-the-lowest-overnight-rate-at-0-25-new-bond-programs-aimed-at-bolstering-economic-recovery\/","title":{"rendered":"BoC Maintains The Lowest Overnight Rate at 0.25% + New Bond Programs Aimed at Bolstering Economic Recovery"},"content":{"rendered":"<p style=\"text-align: justify;\">The Bank of Canada (BoC) chose to maintain its overnight lending rate at 0.25% in their April announcement, noting this rate could be considered its \u201ceffective lower bound\u201d or that no further rate cuts are planned. This rate hold follows three cuts in March 2020 : one at the start of March, followed by an unscheduled cut mid-March and another emergency cut in response to COVID-19 at the end of the month that brought the rate to 0.25%. The current 0.25% rate is the lowest that the BOC has dropped it\u2019s overnight rate since 2010.<\/p>\n<p style=\"text-align: justify;\">Instead, as the effects of COVID-19 are felt widely across the economy, the BoC unveiled two new measures to purchase provincial and corporate bonds in an effort to support credit markets and the financial system at large.<\/p>\n<p style=\"text-align: justify;\"><strong>No Immediate Impact on Mortgage Borrowers<\/strong><\/p>\n<p style=\"text-align: justify;\">Generally speaking, BoC rate changes have the most direct impact on variable rate borrowers, who can expect to see a drop in monthly payments or a lower interest payment if rates drop. This is because the BoC rate, formally known as the Overnight Lending Rate, is used by banks to set their own variable mortgage and credit rates.<\/p>\n<p style=\"text-align: justify;\">With no change in the BoC rate, mortgage borrowers can expect their mortgage payments to remain steady. Further, the BoC\u2019s decision to clarify current rates as their lower threshold is a clear indicator that mortgage borrowers with variable rates should not expect any changes to their monthly payments until the economy stabilizes.<\/p>\n<p style=\"text-align: justify;\">Fixed rate borrowers on the other hand, will see no immediate impact on their monthly costs unless they are looking to renew or refinance an existing mortgage, in which case they can take advantage of the current low rate environment.<\/p>\n<p style=\"text-align: justify;\"><strong>New Bond Programs Aimed At Bolstering Economic Recovery<\/strong><\/p>\n<p style=\"text-align: justify;\">In addition to unprecedented job losses and widespread business closures in the face of COVID-19, Canadian financial markets were further impacted by the drop in commodity prices and a dollar that has depreciated since January.<\/p>\n<p style=\"text-align: justify;\">Although COVID-19 caused a \u201csudden and deep contraction in economic activity and employment worldwide\u201d, the BoC noted that economic recovery would be regionally-driven, likely to occur at different times, and bound by the \u201cduration and severity of the outbreak\u201d in each area. The Bank noted that while the uncertainty of the current environment doesn\u2019t allow for a complete forecast, an analysis of alternative scenarios shows that real activity declined between 1% and 3 % in Q1 of 2020, and is expected to be 15% &#8211; 30% lower in Q2 vs. Q4 of 2019. The extent to which these scenarios will play out will depend on \u201chow long the containment measures remain in place, and how households and firms adapt\u201d said BoC governor Stephen Poloz during his press conference.<\/p>\n<p style=\"text-align: justify;\">As such, to further support individuals and businesses across Canada and ease pressure on Canadian borrowers, the BoC also announced a new Provincial Bond Purchase Program of up to $50 billion and a new Corporate Bond Purchase program to acquire up to $10 billion investment-grade corporate bonds in the open market. Both measures are aimed at creating \u201cconditions for a sustainable recovery and achievement of the inflation target over time.\u201d More information about the new measures announced by the BoC can be found <a href=\"https:\/\/www.bankofcanada.ca\/2020\/04\/fad-press-release-2020-04-15\/\" target=\"_blank\" rel=\"noopener noreferrer\">here<\/a>.<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/www.zoocasa.com\/blog\/bank-of-canada-rate-april-2020\/\" target=\"_blank\" rel=\"noopener noreferrer\">Bank of Canada Maintains Overnight Rate at 0.25%; Unveils New Credit Support Programs<\/a> by zoocasa<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Bank of Canada (BoC) chose to maintain its overnight lending rate at 0.25% in their April announcement, noting this rate could be considered its \u201ceffective lower bound\u201d or that &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2020\/05\/boc-maintains-the-lowest-overnight-rate-at-0-25-new-bond-programs-aimed-at-bolstering-economic-recovery\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-15479","post","type-post","status-publish","format-standard","hentry","category-mortgage"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>BoC Maintains The Lowest Overnight Rate at 0.25% + New Bond Programs Aimed at Bolstering Economic Recovery &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2020\/05\/boc-maintains-the-lowest-overnight-rate-at-0-25-new-bond-programs-aimed-at-bolstering-economic-recovery\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"BoC Maintains The Lowest Overnight Rate at 0.25% + New Bond Programs Aimed at Bolstering Economic Recovery &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"The Bank of Canada (BoC) chose to maintain its overnight lending rate at 0.25% in their April announcement, noting this rate could be considered its \u201ceffective lower bound\u201d or that &hellip; [read more]\" \/>\n<meta name=\"twitter:creator\" content=\"@RoryClipsham\" \/>\n<meta name=\"twitter:site\" content=\"@RoryClipsham\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Rory Clipsham\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2020\\\/05\\\/boc-maintains-the-lowest-overnight-rate-at-0-25-new-bond-programs-aimed-at-bolstering-economic-recovery\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2020\\\/05\\\/boc-maintains-the-lowest-overnight-rate-at-0-25-new-bond-programs-aimed-at-bolstering-economic-recovery\\\/\"},\"author\":{\"name\":\"Rory Clipsham\",\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/#\\\/schema\\\/person\\\/0672b9777e67473b9bd9247df49499c7\"},\"headline\":\"BoC Maintains The Lowest Overnight Rate at 0.25% + New Bond Programs Aimed at Bolstering Economic Recovery\",\"datePublished\":\"2020-05-01T18:11:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2020\\\/05\\\/boc-maintains-the-lowest-overnight-rate-at-0-25-new-bond-programs-aimed-at-bolstering-economic-recovery\\\/\"},\"wordCount\":560,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/#\\\/schema\\\/person\\\/0672b9777e67473b9bd9247df49499c7\"},\"articleSection\":[\"Mortgage\"],\"inLanguage\":\"en-CA\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2020\\\/05\\\/boc-maintains-the-lowest-overnight-rate-at-0-25-new-bond-programs-aimed-at-bolstering-economic-recovery\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2020\\\/05\\\/boc-maintains-the-lowest-overnight-rate-at-0-25-new-bond-programs-aimed-at-bolstering-economic-recovery\\\/\",\"url\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2020\\\/05\\\/boc-maintains-the-lowest-overnight-rate-at-0-25-new-bond-programs-aimed-at-bolstering-economic-recovery\\\/\",\"name\":\"BoC Maintains The Lowest Overnight Rate at 0.25% + New Bond Programs Aimed at Bolstering Economic Recovery &#8226; 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