Written back in October 2010 as we came out of the Financial Big Bang of 2008
The Bank of Canada felt worried about the fragile recovery of the Canadian economy, and North American economy in general. They decided to stop raising interest rates for now. They are keeping their key overnight rate at 1%. This is good for those in debt. However, it is bad for those who are saving in GIC’s, bank accounts, and I suppose CSB’s too.
A telling statement by the Money Mavens at B of C is:
These factors will contribute to a weaker-than-projected recovery in the United States in particular. Growth in emerging-market economies is expected to ease to a more sustainable pace as fiscal and monetary policies are tightened. Heightened tensions in currency markets and related risks associated with global imbalances could result in a more protracted and difficult global recovery.
Interesting, so this recovery we are kind of living in, may not be that vigorous, or worse, sustainable? It is not surprising given how much “stimulus” got pumped into the world’s economies. We were bound to have one heck of a hangover when all that stopped. This seems to be happening now.
The implication in the statement is that as long as inflation stays relatively in check, interest rates may remain low. This serves as a stimulus policy. However, we now see that gas prices have started to increase. This change will have many ripple effects on the economy.
Can the Bank of Canada afford to raise interest rates? I don’t really know. My personal plans are to continue to pay down the debt that I have for now. I am enjoying the power these low interest rates are giving my payments in terms of principle pay down. I hope the rates can stay lower for longer. I am attempting not to incur any more debt for now. I feel I have enough in my life currently.
If you were looking to buy a house, now might be the time to do it. The market is slowing, and there are low rates for fixed long-term mortgages. There might not be a better time if you can afford it.
📈 Bank of Canada Overnight Interest Rate (2005–2025)
🔍 Key Highlights:
- 2005–2007: Rates hovered around 2.75% to 4.50%, reflecting a stable economic period.
- 2008–2009: In response to the global financial crisis, the Bank of Canada slashed rates to a historic low of 0.25%.
- 2010–2018: Gradual increases brought rates up to 1.75% by late 2018.
- 2020: The COVID-19 pandemic prompted a rapid reduction back to 0.25% to support the economy.
- 2022–2023: To combat rising inflation, rates were increased sharply, reaching 5.00% by mid-2023.
- 2024–2025: As inflation pressures eased, the Bank began lowering rates, settling at 2.75% by April 2025.
For a detailed breakdown and the most recent data, you can visit the Bank of Canada's official Interest Rates page.
2010 Interest Rate Articles
- Interest Rates Going Nowhere For January 2010
- Bank of Canada: No Rate Hikes (March 2010)
- Interest Rates, What Did I tell You? April 2010
- June 2010 When Interest Rates Doubled or Rates Up 100%!
- Interest Rates Sky Rocket September 2010
- October 2010 Rates remained the same.
- December 2010 Money is still too loose
- January 2011 No Rate Change but Promises of BIG changes Coming
These factors will contribute to a weaker-than-projected recovery in the United States in particular. this is useful information for anyone willing to learn something new everyday.
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shane ping
Great, now I can plan for the much awaited new house purchase, wes waiting for this announcement only.
Sounds like a good plan BCM; paying down debt. I guess that’s an approach that never goes out of style you could say.
As you might know from my blog, we just bought a house and plan to move in, in a couple of months. Kinda stressful…however, with rates this low, we decided to take advantage of a place we a) lucked out to find and b) fell in love with.
Hopefully everything will work out!