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Bank of Canada Interest Rate Announcement - Sept 6, 2017

September 6, 2017 - Bank of Canada Interest Rate Announcement 
Overnight Leading Rate
The Bank of Canada announced this morning that it is raising its target for the overnight rate by 25 basis points to 1 per cent. In the press release accompanying the decision, the Bank noted that recent economic data have been stronger than expected but growth is forecast to moderate in the second half of the year.  On inflation, the Bank cited some excess capacity and temporary price shocks as factors keeping inflation below its 2 per cent target. Importantly, the Bank mentioned it will be paying particular attention to the evolution of the economy's potential growth rate (meaning the economy's estimated long-run growth rate) as well as to labour market conditions and the economy's sensitivity to higher interest rates.

The Bank has now removed the stimulus it injected into the Canadian economy in 2015 to offset the impact of falling oil prices. With the economy expanding at a 3.5 per cent rate over the past year, that stimulus is clearly no longer required. The Bank seems to be more concerned about the potential for higher future inflation due to an over-heated economy than on the actual very low inflation observed in recent months. That leaves the door open for further rate increases should economic growth remain robust. 
How to Benefit from the Hot Property Market 
The Housing Market in Victoria has been extremely hot for the past eighteen months with both Sellers and Buyers reaping the rewards.  The current inventory is lower than average and coupled with low interest rates, the current housing market will continue to remain hot. 

If you are planning to sell or buy within the next three months, give me a call and I will ensure you realize the best result possible. 

My Best,
Arran

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