The Bank of Canada raised interest rates by 50bps, hoping to cool down Canada’s continually rising inflation rate. But how long will it take for these higher interest rates to filter into Canada’s economy?
While the Bank of Canada has increased interest rates these are unlikely to translate into higher mortgage rates, at least in the short term. Most banks/mortgage lenders have already priced in the 50bps rate hike, which was widely expected by most economists.
While Canada’s inflation rate remains at an all-time high, 6.8%, there is some evidence that the interest rate hikes are having the desired effect. Canada’s real estate market remained sluggish during May, and is widely expected to have undergone major price drops. Buyers are also pulling back from the auto market, with 13 percent of buyers holding off on car purchases.
But the Bank of Canada doesn’t want prices to reverse (besides maybe real estate prices) – which would be deflation, and carries with it a whole host of other issue. They want price-growth to slow, to get back to the 2-3% target range.
Bank of Canada 50-basis-point June 1 hike a done deal, economists say:
Bank of Canada Hikes by 50 Basis Points and Warns of More Moves:
Canadian Real Estate To Fall Double-Digits, Or “I Would Be Shocked”: BMO Director:
Bank of Canada hikes benchmark rate by 50 basis points, as expected:
The mortgage market has priced in rate hikes already: Chief economist:
Consumer prices rose by 6.8 percent in November, as inflation hits highest pace since 1982:
What the latest interest rate hike means for inflation, markets:
Bank of Canada Faces Credibility Test in Political Firestorm Over Inflation:
Canadians increasing budget or delaying car purchases amid high prices: Survey:
Canadian home prices fall 6% in April, down for 2nd month in a row:
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