What's Happening with Rates?

The Bank of Canada is expected to maintain its current interest rate in April.

Canada's inflation rate continues to cool, with the February Consumer Price Index falling more than expected to 5.2% from 5.9% in January. While inflation has slowed in recent months, prices remain elevated, particularly in the food sector, where supply constraints and higher input costs continue to put upward pressure on grocery prices.

However, shelter costs have risen at a slower pace year-over-year for the third consecutive month, reflecting a general cooling of the housing market.  

It feels to me like the housing market is starting to pick up steam.  There is a sense of urgency with buyers to make offers before the market starts to accelerate this Spring.  

The steadiness of the Bank of Canada's interest rate policy decisions have given confidence to real estate buyers and sellers that the cost of their mortgage will not rise dramatically.  We can expect to see some positive news for the number of transactions that happen in March 2023.  Prices won't be at 2022 levels, but price appreciation will go up from previous months.  

Things are starting to break in the US, with three regional banks having failed this month.  This has caused the markets to anticipate more fear and panic.  The result is lower fixed rates as markets predict the Federal Reserve and Bank of Canada will need to reduce policy rates sooner rather than later.  

The Bank of Canada is no doubt pleased with Canada's relatively low inflation rate compared to other countries, and will likely remain in pause mode when they meet again in April.  I still don't think we will have any Bank of Canada policy rate reductions in 2023.