The Bank of Canada is holding the key interest rate for another month.

On March 6, 2019, the Bank of Canada (BOC) announced it is keeping the Canadian interest rate steady at 1.75%. This rate has been in place since October of 2018.

In the March 6 announcement, the BOC also indicated that interest rate hikes may not be coming as frequently as previously expected in 2019.

“Given the mixed picture that the data present, it will take time to gauge the persistence of below-potential growth and the implications for the inflation outlook,” the BOC stated in a release.

“With increased uncertainty about the timing of future rate increases, Governing Council will be watching closely developments in household spending, oil markets, and global trade policy.”

The BOC’s March assessment, noted several items of importance about the Canadian and global economies:

• The slowdown in the global economy has been more pronounced and widespread than the Bank had forecast in January.
• In Canada, the economy will be weaker in the first half of 2019 than the Bank projected in January.
• Canadian consumer spending and housing market were both “soft” in the final quarter of 2018, despite strong growth in employment and labour income.
• Exports and business investment fell short of expectations.

The Good News

For those who are carrying debt, the Bank of Canada interest rate pause means more time to deal with it.

Debt consolidation, credit counselling, or insolvency filing options – like filing for a Consumer Proposal or for Bankruptcy — can all help deal with debt quickly and sustainably.

It seems that the BOC is in less of a hurry to raise interest rates now, so use this time wisely to make a financial plan that will keep you secure even if interest rates start to rise again.

The Uncertain News

While the interest rate pause is helpful for those facing debt, there is an item that may be of concern: the BOC said employment rates and labour income is up, but consumer spending and the housing market is down.

There are many reasons that could explain this, but some that may be affecting Canadians include:

• Housing affordability and high food costs. The price of rent, cost to buy a house, and shop at the grocery store are all increasing. Even a pay bump may not mean much if costs keep going up, too.
• High employment rates don’t always indicate secure employment. While the employment rate is up, so is “precarious employment” — meaning jobs that are less than stable. We’ve seen this recently with the GM layoffs and Maple Leaf Foods plant closures. Precarious employment can also refer to temporary contract jobs, or jobs with changing hours (i.e. 15 hours one week, 40 the next, and so on). All of this and more can make it hard to stay on budget.
• Property values might be dropping. As the housing market slows down, property values may also be decreasing. If you are relying on home equity for financing, it may mean accessing it sooner rather than later.

Your financial position depends on many factors that are all unique to you. Use this Bank of Canada pause to make a personal finance plan that is right for you.

The next Bank of Canada announcement is scheduled for April 24, 2019.

At Fuller Financial Solutions, we take a personal approach to personal debt and we will help you create a plan to weather interest rate increases, gaps in employment, and more.

Contact us today for a free consultation in the GTA or Southern Ontario. Call 416-927-7200 or visit www.fullersolutions.ca.