New Bank of Canada Announcement: Bank of Canada maintains policy rate, continues quantitative tightening

The Bank of Canada has announced it is maintaining the policy rate at 5% and continuing quantitative tightening. 

Global economic growth continues to slow, with inflation easing gradually across most economies. While growth in the United States has been stronger than expected, it is anticipated to slow in 2024, with weakening consumer spending and business investment.

Meanwhile, oil prices are about $10 per barrel lower than was assumed in the October Monetary Policy Report (MPR). Financial conditions have eased, largely reversing the tightening that occurred last autumn.

Economic Overview

In Canada, the economy has stalled since the middle of 2023 and growth will likely remain close to zero through the first quarter of 2024. Consumers have pulled back their spending in response to higher prices and interest rates. With weak growth, supply has caught up with demand and the economy now looks to be operating in modest excess supply.

Labour market conditions have eased, with job vacancies returning to near pre-pandemic levels and new jobs being created at a slower rate than population growth. However, wages are still rising around 4% to 5%.

Impact on the Ottawa Housing Market

The Bank of Canada's decision to maintain its policy rate at 5% and continue quantitative tightening has direct implications for the Ottawa real estate market. While the latter half of 2024 holds potential for increased real estate activity with a gradually strengthening economy, a watchful eye on the evolving economic landscape remains crucial for those navigating the Ottawa market.

Conclusion

Given the outlook, Governing Council has decided to hold the policy rate at 5% and to continue to normalize the Bank’s balance sheet. The Council remains vigilant about risks to inflation, particularly underlying inflation persistence. 

The next announcement for the overnight rate target is scheduled for March 6, 2024.  

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Note: This blog post is for informational purposes only and should not be considered financial or investment advice. Please consult with a qualified professional for personalized guidance related to real estate and investment decisions.