Bank of Canada interest rate: Latest News

The Bank of Canada ended its interest rate pause on Wednesday as it looks to stamp out inflation and cool the country’s red-hot economy.

The annual rate of inflation dropped sharply last month, but some economists argue a slowdown might not be enough to deter the Bank of Canada from another rate hike in July.

Reining in government spending could take some of the pressure off the Bank of Canada in tamping down inflation and help limit pain for debt-ridden Canadians, according to a new report from CIBC.

Bank of Canada’s interest rate pause is set for its toughest challenge yet on Wednesday as policymakers weigh whether another hike is needed to quell a resilient economy and push inflation down further.While money markets and some economists say that another hike is in the cards for this week’s interest rate decision, those who spoke to Global News argue the central bank is better off waiting to move off the sidelines and signalling a possible increase later this summer.The Bank of Canada’s rate hike campaign has been on a “conditional pause” since March, following eight consecutive increases that raised the central bank’s policy rate to 4.5 per cent, up from the lows of 0.25 per cent seen through much of the pandemic.The central bank said it could remain on pause as long as data continued to show the economy was cooling enough to bring inflation back down to its two per cent target, which has been forecast to reach in 2024.The rate increases to date have raised the cost of borrowing for Canadians and their banks in an effort to cool the economy and take some of the steam out of inflation, which reached 40-plus-year highs in 2022.Inflation has declined significantly, though Statistics Canada’s headline reading ticked back up slightly to 4.4 per cent in the latest consumer price index report for April from March’s 4.3 per cent.The economy, meanwhile, has proved hotter than the Bank of Canada’s estimates: gross domestic product (GDP) was higher than forecast in the first quarter of the year, and expectations of a pronounced slowdown haven’t yet materialized.Avery Shenfeld, chief economist at CIBC Capital Markets, tells Global News that the economy can only run unchecked for so long before a flurry of spending drives prices

The national economy continued to grow overall in the first quarter of 2023 as consumers spent more in the face of recession fears, according to Statistics Canada.

mortgage rates are ratcheting up the pressure on Canadian landlords, especially young investors who are facing the harsh side of the interest rate cycle for the first time.A report released Thursday by Royal LePage shows higher payments are even pushing some housing investors to consider selling off their properties. But for 32-year-old Karim Najjar, that decision is about more than just writing off the loss on an investment.Najjar moved to Ottawa from Edmonton in 2017 and jumped into the housing market a year after he arrived.His timing into the market was good, Najjar recalls, as home prices soared in his first few years of ownership.

Bank of Canada will hold interest rates at the 15-year high 4.50 per cent until the end of 2023, before starting to cut rates at the start of next year, according to a median of market participants in the central bank’s survey released on Monday.The bank’s survey of market participants, the second iteration of the poll first released in February, showed a median of the participants forecasting interest rates dropping to 3.0 per cent by the end of 2024.Market participants in the first survey released in February had said rates would fall to 4.0 per cent by the end of the year.A median of 26 participants predicted a 0.1 per cent contraction of gross domestic product at the end of 2023, compared with a 0.4 per cent decline forecast in the last survey.The participants, surveyed from March 9 to 23, cited weaker housing market and tightening of financial conditions among top risks that could curtail Canadian growth.The bank raised interest rates eight consecutive times through January in an effort to cool high inflation that peaked at a four decade high last year.The bank has since kept rates steady at two meetings, in part because Governor Tiff Macklem has said the goal is to slow growth, but avoid a recession.Annual inflation rate eased to 4.3 per cent in March, but is still more than double the bank’s two per cent target.

interest rates over the last year is starting to throttle the pace of homebuilding, the Canada Mortgage and Housing Corp. (CMHC) warned in a new housing supply report Wednesday.As the Bank of Canada’s interest rates rose substantially through 2022 and early 2023, many homebuyers were priced out of the market and home values retrenched from their pandemic-era highs.

Bank of Canada left its benchmark interest rate unchanged on Wednesday, in keeping with expectations from economists.The decision to keep its key policy rate at 4.5 per cent in its second consecutive meeting comes after a year of rapid rate hikes aimed at taming inflation. Read more: U.S.