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 and Canadian Economic Outlook

The global economy experienced a slowdown in the fourth quarter, however the US GDP growth remained robust. In contrast, the euro area saw flat economic growth after a contraction in the previous quarter.

Inflation in both the US and the euro area continued to ease, while global oil prices slightly surpassed previous assumptions.

Canada's economy showed unexpected growth in the fourth quarter. Real GDP expanded by 1%, mainly due to a significant increase in exports, offsetting a decline in business investment. While employment continues to grow slower than the population, there are early signs of easing wage pressures.

Inflation and Policy Decisions

CPI inflation in Canada eased to 2.9% in January, primarily due to moderating goods prices. However, shelter price inflation remains high, contributing significantly to overall inflation. The Bank expects inflation to hover around 3% in the first half of the year before gradually easing.

In light of these factors, the Bank of Canada decided to maintain the policy rate at 5% and continue normalizing its balance sheet. The focus remains on addressing underlying inflation concerns and maintaining a balance between economic demand and supply. 

Impact on the Ottawa Real Estate Market

The Bank of Canada's decision to maintain a 5% policy rate and continue tightening measures has implications heading into Ottawa's spring real estate market.

Prospective homebuyers may face affordability challenges due to steady interest rates affecting borrowing costs. However, recent unexpected economic growth in Canada and signs of easing wage pressures offer some optimism. As the spring season approaches, it's important for buyers and sellers in Ottawa to stay informed and adaptable to changing market conditions.

The next scheduled announcement for the overnight rate target is on April 10, 2024, alongside the release of the Monetary Policy Report.

Questions about the Ottawa real estate market? Contact us today!

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.