Well it’s that time again when the Bank of Canada considers doing something with its overnight target rate, the benchmark interest rate that affects interest rates, directly and indirectly, throughout the country.

The Bank’s overnight target rate is currently one per cent, low by historical standards although it has been lower dropping to a record 0.25 per cent in the spring of 2009 and staying at that record low for more than a year.

Now the first murmurings to be heard (and I expect more will come in the next few days) are that while the bank will likely hold the rate steady next week the next move may be down not up.

“The worsening sovereign debt crisis in Europe, which the Bank now admits looks barely contained, has weakened global economic growth prospects,” writes David Madani of Capital Economics in Toronto. “As such, we think the Bank’s next move will be to lower interest rates, possibly in April or June next year, from 1.00% to 0.50%.

“More importantly,” Madani adds, “we doubt that interest rates will go up at all between now and the end of 2013.”

The last time we had a overnight target rate of more than one per cent was January 19, 2009, the day before the Bank lowered the rate from 1.50 per cent to 1.00 per cent. That’s a long time for consumers to have the benefit of low interest rates and it looks like it could last longer still.

Courtesy the Vanvouver Sun Nov 29th 2011

The BOC is set to make an announcment Dec 6th 2011

Angela Calla, AMP Dominion Lending Centers 604-802-3983 acalla@dominionlending.ca