Bank of Canada Rate Announcement

March 6, 2024

The Bank of Canada has recently announced its decision to maintain the overnight rate at 5%, continuing its approach towards quantitative tightening. The prime rate will remain at 7.2%

This decision underscores the Bank’s commitment to closely monitoring inflation. The Canadian economy has shown resilience, experiencing 1% growth in the last quarter. However, this growth still needs to be considered below potential, marked by a significant decrease in business investment and domestic demand. 

While employment growth has been observed, it has yet to keep pace with population growth. Nonetheless, there are indications of easing wage pressures, which could affect inflation dynamics. The Consumer Price Index (CPI) inflation has moderated to 2.9% in January, although housing costs continue to rise.

In light of these developments, the Bank of Canada’s cautious stance suggests a possibility of rate adjustments shortly, with many analysts predicting potential rate cuts as early as June. 

Implications for You: If you currently hold a variable-rate mortgage, adjustable-rate mortgage, or a home equity line of credit (HELOC), you continue to keep your current rate. The Bank of Canada’s next meeting on April 10 will provide further insights, but our preliminary analysis suggests that interest rates will likely remain the same.

As we navigate these evolving economic conditions, we must reassess and adjust our financial plans to align with the changing landscape. Whether it involves optimizing your loan repayments, revisiting investment strategies, or discussing any concerns and opportunities, we are here to provide you with the expertise and support you need.

Please feel free to contact us directly to discuss your financial situation and how we can proactively adjust your financial strategy to take advantage of the current economic conditions.

The best way to adapt to the ever-changing economic landscape is to be prepared. If you have questions or concerns about the recent Bank of Canada update and its potential impact on your mortgage, our Mortgage Strategy Managers are ready to assist.

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