The Bank of Canada’s battle to tame inflation has been a long journey. While many were enthusiastic to hear of interest rate cuts in early 2024, The Bank of Canada is warning Canadians to stay patient as they navigate whether a quick cut during the spring real estate surge would cause inflation to rise again and sabotage their goals.
It is still unclear as to how long The Bank of Canada would need to hold interest rates at this level to get inflation down to 2% however economists are predicting some reduction in interest rates to come June or July of this year. Many Canadians who have been waiting for interest rates to lower to buy, would be eager to jump in this spring and summer and invest in property once again.
Important Takeaways
While the current interest rate is holding at 5%, don’t expect The Bank of Canada to cut down interest rates in time for the spring real estate market. The bank warns that it is going to take some time to get to its target and that it hopes to do it slowly to safeguard further inflation.
Canadians will need to take into consideration that there are multiple variables at play in controlling inflation and that some of it is not entirely Canadian-generated. Factors and variables including conflict overseas, supply chain issues and the transportation of goods are all coexisting and contributing to the current real estate market conditions. The Bank of Canada is looking for a steadying of wage growth and shelter costs as well to help push the interest rates down.
While the Bank of Canada does assure that cuts are on the way, they’re clear to communicate that Canadians simply need to wait and see for more factors to come together cohesively to create the environment for the interest rates to come down without affecting inflation. As mentioned, economists predict rates to come down in June or July alongside the worry of spurring a spending frenzy and causing another cycle of inflation.
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