On Wednesday, January 25th, 2023, The Bank of Canada increased its overnight rate to 4½%, with the Bank Rate at 4¾% and the deposit rate at 4½%. The Bank is also continuing its policy of quantitative tightening .
This is the Bank’s eighth consecutive rate hike and was expected by markets.
Looking ahead, the Bank said it “expects to hold the policy rate at its current level while it assesses the impact of the cumulative interest rate increases,” but that it is also “prepared to increase the policy rate further if needed.”
There is a growing consensus that the Bank has now reached—or is nearing—its terminal rate for this rate-hike cycle. Officials from the Bank of Canada have indicated that its future rate decisions will be driven by economic data. The next announcement will take place March 8th.
As noted in Mortgage Professionals Canada’s January 2023 Housing and Mortgage Market Review released Monday, some progress has been made in the fight against record-high inflation.
“While borrowers have so far been largely resilient in the face of sharply higher interest rates, we can’t ignore the affordability challenges that are being faced by many.
The hope is that inflation will continue to moderate in the coming months and that this is the final rate hike variable-rate mortgage borrowers will have to contend with. The uncertainty we continue to see in the market under scores the value of mortgage professionals.” – Lauren van den Berg, President & CEO, MPC The Bank of Canada.
The next scheduled date for announcing the overnight rate target is March 8th, 2023. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR on April 12, 2023.
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