As yet, there's no end point in sight for the Bank of Canada's rate hike plan. interestrates inflation mortgagerates realestate housingmarket realestatenews
Published:Some not-so-great news for borrowers shouldering steeper mortgage costs: there’s no end point in sight for the Bank of Canada’s rate hike plan, as confirmed today in a speech from Governor Tiff Macklem.
Hiking interest rates combats inflation by slowing consumer and business spending and borrowing, allowing supply to catch up. The impacts are already being keenly felt in various economic sectors, especially the housing market. Real estate sales and prices have slowed significantly in Canada’s largest markets since the BoC started to raise rates; its benchmark cost of borrowing has soared from the pandemic-era low of 0.25% to 3.25% today, the fastest rate hiking pace seen since the mid-90s.
While Macklem didn’t go as far as to hint just how high the BoC is willing to take its Overnight Lending Rate, other economists believeHowever, despite the resulting rate pain for consumers, Macklem doubled down on the need to nip inflation in the bud, to prevent inflation expectations from becoming entrenched in the economy, and to restore overall price stability.“Higher prices for energy, food and tradable goods explain most of the surge in inflation we’re experiencing.
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