Bank of Canada Rate Announcement
December 6, 2023
As of December 6, 2023, the Bank of Canada has maintained its policy rate at 5%, which means the Prime rate will remain at 7.20%. This decision is part of the Bank’s ongoing quantitative tightening policy.
Global Economic Outlook:
The global economy is experiencing a slowdown, and inflation has shown signs of easing; notably, despite more robust growth led by consumer spending, a weakening trend is expected in the United States in the coming months. The euro area also witnessed slowed growth, contributing to reduced inflationary pressures globally.
Canadian Economic Context:
Canada’s economic growth has stalled, with Real GDP contracting at a rate of 1.1% in the third quarter of 2023. Higher interest rates are restraining spending, and the labour market shows signs of easing. Despite these challenges, wages are still rising by 4-5%.
Inflation and Mortgage Costs:
There’s a reduction in inflationary pressures across various goods and services. However, shelter price inflation, which includes rent and housing costs, has increased, partly due to elevated mortgage interest costs. The Bank’s core inflation measures are currently around 3½-4%.
The Bank of Canada remains committed to restoring price stability and is prepared to adjust the policy rate if necessary. The next update on the overnight rate target is scheduled for January 24, 2023.
What This Means for You:
The current economic scenario and the Bank of Canada’s policy stance suggest a stable interest rate environment in the near term. However, staying informed and prepared for potential changes that could affect your mortgage and overall financial planning is crucial.
We understand that navigating these changes can be complex. Our team is here to assist you with any questions or concerns about your mortgage and how these developments might impact you.
We’ll continue to monitor the situation and provide updates as necessary. Our top priority is your financial well-being, and we are here to support you through these times.