Real Estate News |
April 10, 2024
Starting in March 2022, the Bank of Canada considerably raised its interest rate to stop inflation.
They increased it ten times in less than two years.
After keeping its primary interest rate steady at 5% for the sixth time, the Bank of Canada shows cautious hope about the national housing market.
Experts think there might be a comeback, following several periods of keeping the rate unchanged after a long period of raising it. But this expected recovery might not happen right away.
Watching Indicators for Interest Rate Changes
During a recent press conference, Bank of Canada Governor Tiff Macklem said they’re closely watching signs of inflation slowing down before considering changing the rate. Despite acknowledging that inflation has been high, Macklem pointed out that some measures of inflation, not including food and energy prices that change a lot, have been going down recently.
Factors Affecting Rate Drops
Macklem said, “I know most Canadians want to know when we’ll lower our interest rate. What do we need to see to be sure it’s time to do that?” He said they need more evidence that inflation is slowing down and staying that way.
Possibility of Lowering The Interest Rate in June
There’s a chance they might lower the rate in June, as inflation slowed to 2.8% in February, mainly because prices of goods, food, clothes, and services grew more slowly. But rent and mortgage costs are still driving inflation up.
Future Outlook and Predictions
The Bank expects inflation to gradually increase to its target of two percent this year and reach it by 2025. They’re also optimistic about the economy’s growth in the coming years because more people live here and spend more money.
Keeping the Economy Stable
In short, the Bank of Canada’s decision to keep the main interest rate the same shows that they’re careful to keep the economy stable while inflation changes. As the housing market looks toward a possible recovery, the Bank needs to keep watching and adjusting its plans to keep the economy growing steadily and avoid big problems.
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