On March 8th 2023, the Bank of Canada (BoC) announced that it will be keeping the interest rate steady at 4.5%, marking the first break in a year of consecutive rate increases. While this decision was widely expected by economists and analysts, it is significant in the context of recent efforts to control inflation.
Inflation has been a concern for policymakers and consumers alike, and the Bank of Canada has been working to bring it under control. The decision to keep interest rates steady is part of this effort, and the Bank of Canada expects inflation to ease in the coming months. It has set a target inflation rate of between 1% and 3%, and is confident that inflation will fall below the upper end of this range around June.
The Canadian economy saw zero growth in the fourth quarter of 2022, this is telling the BoC that their policy is effective. However, with the interest rate held steady, the Bank of Canada is signalling its confidence that it can control inflation without sending us into a deep recession. The world economies are slowing down, so there is a good chance that we will not see more increase. BoC still reserve the right to increase rates if inflation start to pickup again or if economic growth return to normal. However, we should not expect rate drop before at least the end of the year or even next year. They want to make sure that inflation will not come back. The next meeting will be on April 14th.
For your mortgage, this is great news. There is no change. If you have a preapproval you are more likely to have a fixed rate than a variable rate so, there is no change for your qualification amount either.
Do not hesitate to contact me if you have any questions or if you would like to discuss going from a Variable rate to a fix rate. You can take an appointment with the link below.
Have a great day.