Here is what you should know from the Bank of Canada, which just announced its eighth consecutive interest-rate increase, this one .25 per cent, a figure that was widely anticipated by financial analysts:
• It is expected to be the last of the increases that began early in 2022.
• The current rate is 4.5 per cent, and is expected to hold while the Bank monitors the impact of the preceding increases.
• Five-year fixed-mortgage rates dropped slightly this month, from 5.5 per cent to 5.19.
• The variable mortgage rate is still elevated at 6.35 per cent.
• Inflation has probably peaked and is expected to decline significantly this year and return to its 2 per cent target by 2024.
• Recent economic growth (3.6 er cent in 2022) has been stronger than expected, and labour markets remain tight but it sees growing evidence that monetary policy is working to slow the economy.
• The economy is likely to stall, then pick up towards the end of this year, leading to interest-rate cuts.
• The trajectory of mortgage rates will depend on economic outlook.
That’s what the Bank of Canada is saying, along with this caveat from its governor, Tiff Macklem:
“To be clear, this is a conditional pause—it is conditional on economic developments evolving broadly…If we need to do more to get inflation to the 2% target, we will.”