TD spells out dangers of Bank of Canada cutting rates too soon
In the coming months, the Bank of Canada is likely to begin its policy rate cuts despite sticky inflation continuing to exceed the institution’s 2% target – but TD economists are warning that this will pose a significant challenge in the central bank’s attempts to communicate to the public and anchor household inflation expectations. “The central bank will have to cut interest rates in the face of stubbornly high shelter costs because to neglect to do so risks running the economy aground,” TD said in a new analysis. “In turn, this could amplify household inflation expectations, which are sensitive to …
Market recovery likely a ‘second half of the year story’: CEO
An upturn for Canada’s mortgage and housing markets could be in the cards for 2024 – but that recovery is unlikely to be a straightforward one, with progress set to be steady rather than spectacular. That’s the view of Donaldson Capital founder and CEO Drew Donaldson (pictured), who told Canadian Mortgage Professional that while the outlook for this year’s market was positive, he expected activity to remain subdued – and rates to stay relatively high – in its opening months. “I just don’t think it’s going to be a straight line,” he said. “As much as I’m optimistic for 2024, I still …
Four major banks reveal forecasts on upcoming inflation data
Economists and researchers from the four major banks in Canada have revealed their forecasts regarding the upcoming Canadian inflation data, as reported in an article by fxstreet.com. Headline inflation is expected to be at 2.9% year-on-year in November. The core trim is expected to fall to 3.3% year-over-year while the core median is expected to be at 3.3% year-over-year. If this occurs, headline inflation will be at its lowest levels since March 2021, and will also fall back within the 1-3% target range that the Bank of Canada has set. What are the four major banks’ forecasts? According to TDS, …
Bank of Canada governor considers rate cuts but says it is still too early
The Bank of Canada’s top official has stated that while the bank considered cutting interest rates when inflation was headed towards its 2% target, it is still too early to do so, as reported in an article by Bloomberg. Tiff Macklem, he Bank of Canada’s governor, said that once officials are assured that price pressures are set on a downward trend, the central bank will consider whether or not it can lower its current policy rate. “I know it is tempting to rush ahead to that discussion. But it’s still too early to consider cutting our policy rate,” said Macklem. …
Canadian home prices drop to levels not seen in 14 months
Canadian home prices saw their largest drop in more than a year despite persistent high borrowing costs impacting potential buyers. The Canadian Real Estate Association released data showing the benchmark price of homes in Canada fell by 1.1% in November from the previous month. This marked the biggest decline seen since September 2022 and was the third consecutive decrease as the benchmark price now stands at $735,000. Home sales dropped by 0.9% in November month-over-month as mortgage rates remain at high levels. New listings also fell by 1.8%, while the sales-to-new listings ratio stood at 49.8%. With the same statistic …
Is it too early to discuss Bank of Canada rate cuts?
The Bank of Canada’s decision to leave rates unchanged on Wednesday was an unsurprising one – but its continuing indication of a willingness to raise rates means it’s “probably premature” to discuss cuts at present. That’s according to Bank of Montreal (BMO) chief economist Doug Porter (pictured), who told Canadian Mortgage Professional that the central bank appears keen to pour cold water on the idea that it’s finished with rate hikes despite increasing certainty from financial markets. “The fact that they kept rates unchanged was absolutely expected, but we also thought they would still talk about the possibility of rate hikes, even …
Bank of Canada reveals final rate decision of 2023
The Bank of Canada has left its policy interest rate unchanged in its last scheduled decision of 2023, keeping rates where they are for a third consecutive announcement amidst evidence that previous hikes are proving effective in cooling the economy. The central bank kept its benchmark rate, which leads variable mortgage rates in Canada, at its existing level of 5.0% in Wednesday’s decision, meaning the current pause on rate increases is the longest since the Bank began hiking rates in March 2022. In its statement accompanying Wednesday’s decision, the central bank maintained a hawkish tone, indicating its governing council was …
BoC will be in no hurry to cut rates in 2024, warns economist
Despite emerging signs of a slowing economy, the Bank of Canada will not be that eager to cut rates within the next few months as inflation might take longer than anticipated to drop to the central bank’s 2% target, according to David Watt, chief economist at HSBC Canada. Watt said that any downward adjustment of the BoC’s policy rate is only likely to materialize after a few quarters. “We’re not thinking the bank is going to move until the second half of next year, maybe around mid-year, simply because we’re not convinced that the inflation numbers are going to come …
Rent rates spike due to early completions, data suggests
An early influx of purpose-built units in various markets led to a noticeable increase in Canada’s average rents in October, according to a new report by Rentals.ca and Urbanation. This was especially apparent in Alberta, Quebec, and Nova Scotia, which all benefited from “a combination of strong population growth and large infusions of new rental supply priced at above-average market rents,” the report said. Data from the Canada Mortgage and Housing Corporation showed that a total of 36,292 new rental units were completed in these three provinces over the past year. This combined figure accounted for roughly 55% of rental apartments …
How concerned are Canadian homeowners about meeting their mortgage obligations?
Canadian homeowners are continuing to express concern about their ability to meet their mortgage payments, according to a new report by RATESDOTCA. The new survey found that 35% of homeowners were concerned about not being able to pay their mortgages over the next three years. While 51% of these respondents were younger than 55, there were 59% of respondents said they were not concerned about such payments. About 72% of these respondents were older than 55. Minorities (53%) were more likely to be concerned about their ability to pay their mortgages compared to respondents who were non-visible minorities (32%). The …
