BCREA announced that the Bank of Canada elected to leave its overnight rate at 1.75% rather than continuing the Bank's objective to "normalizing" its policy rate to between 2.5% and 3.5%. Reasons cited for the decision included that the economy will be challenged by Alberta's cutbacks in oil production. Other factors include the announced shutdown of GM's Oshawa plant, slowing housing market across Canada and a potentially sharp slowdown in US economic growth next year.
Given these factors and the Bank's goal to increase rates, BCREA states, "our baseline forecast is that the Bank will only be able t bring its overnight rate to 2.5 per cent during this tightening cycle." Further, BCREA suggest that, "the timing of rate increases, rather than their direction, is more the pertinent issue."