With a sigh of relief for most Canadians the Bank of Canada has announced today that it will not be raising its key rates as it sees the inflationary pressures easing with the economic slowdown. The over night rate will stay put at 5% for now.
"The slowdown in the economy is reducing inflationary pressures in a broadening range of goods and services prices. Combined with the drop in gasoline prices, this contributed to the easing of CPI inflation to 3.1% in October. However, shelter price inflation has picked up, reflecting faster growth in rent and other housing costs along with the continued contribution from elevated mortgage interest costs. In recent months, the Bank’s preferred measures of core inflation have been around 3½-4%, with the October data coming in towards the lower end of this range.
With further signs that monetary policy is moderating spending and relieving price pressures, Governing Council decided to hold the policy rate at 5% and to continue to normalize the Bank’s balance sheet. Governing Council is still concerned about risks to the outlook for inflation and remains prepared to raise the policy rate further if needed. Governing Council wants to see further and sustained easing in core inflation, and continues to focus on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour. The Bank remains resolute in its commitment to restoring price stability for Canadians." - Bank of Canada
As we head into the holiday season, everyone can sleep a little easier knowing that their payments will not be going up if they aren't locked in a fixed term mortgage or if a mortgage renewals is coming up in the new year.
If you are one of those considering purchasing a home, now would be a great time to get yourself in touch with a real estate professional and mortgage broker to plan your next steps. Getting a rate hold is beneficial because you will have the security knowing if rates do go up you will have the lower rate, and if they go down well, so will yours. It protects you from getting stuck with higher rates should they increase in January.
It will be interesting to see if the rates will remain steady as we head into the new year. Stay tuned for the next announcement on January 24, 2024.
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Posted by Robert and Shawna Eskiw on