Inflation and The Bank of Canada Interest Rate Announcement

Economic Update: Inflation and The Bank of Canada Interest Rate Announcement

As a mortgage broker in Ontario, Canada, staying informed about inflation, interest rates, and their impact on mortgages is crucial for our clients. With the Bank of Canada’s recent announcement on March 6, 2024, and the current inflation trends, here’s what you need to know:

Inflation and Mortgage Rates

Inflation directly affects interest rates, which in turn impact your mortgage. The Bank of Canada adjusts interest rates to keep inflation in check. Recently, inflation has shown signs of easing, with the annual rate slowing to 2.9% in January. However, core inflation, which includes housing and rental costs, remains a risk.

Bank of Canada’s Decision

The Bank of Canada has maintained its target for the overnight rate at 5%, with the benchmark prime rate remaining at 7.20%. This decision reflects the Bank’s ongoing concerns about inflation, particularly the persistence in underlying inflation. The Bank aims to bring inflation down to its 2% target, and the timing for any future rate cuts will depend on inflation trends.

What This Means for Your Mortgage

If you’re renewing your mortgage, it’s important to start shopping around early to secure the best rate possible. With the current interest rate environment, locking in a rate sooner rather than later could be beneficial. For those considering refinancing, now might be a good time to act, given the potential for rate changes in the near future.

Looking Ahead

Inflation remains a risk, and rate hikes are not completely off the table. However, most economists predict that we will see rate cuts in the second half of this year, with the first starting in June or July. The next CPI update for February’s numbers will be released on March 19.  The next Bank of Canada rate announcement is scheduled for April 10, where we are hoping for a 1/4% decrease or more forward guidance on rates decreasing by June.

Stay tuned to our blog for more updates and tips on navigating the mortgage landscape in Ontario, Canada.  Contact us with any questions you might have and let us help you win with your mortgage in 2024.

Read the full Bank of Canada Press Release here, and watch the press conference here:

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