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Bank of Canada Holds Rates: Economic Outlook For Calgary

Bank of Canada Rate Update Jan 24 2022

Yesterday we went live on YouTube to discuss the Bank of Canada Announcement.

Understanding the Impact of Bank of Canada’s Stable Interest Rate Decision

In its first announcement of 2024, the Bank of Canada has decided to maintain the current interest rate, continuing the trend set since early 2022 and the last increase in mid-2023. This decision affects those with variable rate mortgages or home equity lines of credit, who will see no immediate relief from the current high interest rates.

The next announcement, expected on March 6th, may offer further clues on the economic direction. However, the bank has already hinted at a stalled economic growth since mid-2023, with expectations of this trend continuing into the first quarter of 2024.

Notably, the Bank of Canada’s analysis suggests that consumer spending has declined in response to higher interest rates and price increases, a move that aligns with the intended effects of rate hikes – to temper spending and borrowing.

Economic Indicators Show a Starker Picture

When considering GDP growth on a per capita basis, the picture appears more concerning, with growth falling below zero. This per capita analysis reveals that, despite overall growth, the average economic output per person is in decline, suggesting a more significant economic slowdown than headline figures may suggest.

This downturn has been especially pronounced in Quebec, where GDP has been negative for two consecutive quarters, potentially indicating a recession in one of Canada’s major provinces.

Looking Ahead: Interest Rate Predictions

Analyses from economic think tanks, including a recent Reuters poll of economists, anticipate the first rate cut could come as soon as June 2024. Further predictions from Capital Economics suggest a series of rate decreases every six weeks, totaling a 2% reduction, potentially bringing substantial relief to those with variable rate mortgages by mid-2025.

This expected decrease in interest rates, coupled with anticipated reductions in fixed mortgage rates, points towards a return to more affordable home ownership and potentially stimulating economic growth in a tight housing market.

As the situation evolves, keeping a close eye on economic indicators and Bank of Canada announcements will be crucial for homeowners and potential buyers alike.




Josh Tagg has been the owner of Mortgages For Less since 2006. During that time Josh has developed a reputation for being an industry leader and advocate for client education.


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