New Bank of Canada Announcement: Bank of Canada Maintains Policy Rate

The Bank of Canada has held its target for the overnight rate at 4½%, with the Bank Rate at 4¾% and the deposit rate at 4½%. This decision comes as inflation in many countries is easing due to lower energy prices, normalizing global supply chains, and tighter monetary policy. However, measures of core inflation in many advanced economies suggest persistent price pressures, especially for services, and labor markets remain tight.

Demand Continues to Exceed Supply...

In Canada, demand continues to exceed supply, and the labor market remains tight. Economic growth in the first quarter looks to be stronger than was projected in January, with a bounce in exports and solid consumption growth. However, as more households renew their mortgages at higher rates, and restrictive monetary policy works its way through the economy more broadly, consumption is expected to moderate this year.

New Bank of Canada Announcement and Housing Market Activity

As a result, the Bank of Canada is maintaining its policy of quantitative tightening to complement its restrictive stance. The Bank is assessing whether monetary policy is sufficiently restrictive to relieve price pressures and remains prepared to raise the policy rate further if needed to return inflation to the 2% target. The Bank remains committed to restoring price stability for Canadians.

The housing market activity in Canada remains subdued. However, strong population gains are adding to labor supply and supporting employment growth while also boosting aggregate consumption. This suggests that the Canadian real estate market may see some positive movement in the coming months.

Inflation and the Canadian Housing Market

While the Bank of Canada's decision to hold the overnight rate target may not have a direct impact on the real estate market, it does signal a continued effort to maintain price stability and keep inflation in check. With economic growth expected to be weak through the remainder of this year before strengthening gradually next year, it remains to be seen how this will impact the real estate market in the long run.

Overall, it is important for real estate professionals to keep an eye on the economic outlook and inflation rates to better understand how these factors may impact the Canadian housing market. With the Bank of Canada remaining committed to restoring price stability, it is clear that economic factors will continue to play a significant role in shaping the real estate market in the months and years to come.

If you are looking to purchase or sell a home in Ottawa, contact us today to learn more.