BOC 26 Jan 22 Interest Rate

BANK OF CANADA HOLDS INTEREST RATE STEADY

Wednesday Jan 26th, 2022

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BOC HOLDS INTEREST RATE STEADY, DESPITE SOARING INFLATION

January 26th, 2022

 

Canadian Real Estate Prices Expected To Continue Rising

 

   Rumours of an imminent interest rate hike did not materialize, as the Bank of Canada opted to maintain its benchmark rate at a record-low 0.25% in its scheduled interest rate announcement today. The move (or lack thereof) comes despite soaring inflation and a stronger-than-expected economic recovery. The Bank noted that economic slack has been absorbed but said the Omicron variant of COVID-19 continues to weigh on growth.

   Globally, good are in high demand, with supply-chain disruptions impeding production and transportation pushing inflation upward. The Bank projected global GDP growth to ease from 6¾% in last year, to 3½% in 2022 and 2023.

   Meanwhile, Canada’s economy proved stronger than expected in the third and fourth quarters, rounding out 2021 at +4½%. Entering 2022, the Bank highlighted economic momentum, pointing to employment growth, a tighter labour market, job vacancies, strong hiring intentions and rising wages as positive factors. The Bank forecasts Canada’s economy to grow by four per cent this year and another 3½% in 2023.

CPI inflation remains well above the target range and core measures of inflation have edged up since October. Persistent supply constraints are feeding through to a broader range of goods prices and, combined with higher food and energy prices, are expected to keep CPI inflation close to five per cent in the first half of 2022. As supply shortages diminish, inflation is expected to decline reasonably quickly to about three per cent by the end of this year and then gradually ease towards the target over the projection period,” said the Bank. “Near-term inflation expectations have moved up, but longer-run expectations remain anchored on the two-per-cent target.

   On a final note, the Bank also expects elevated housing market activity to continue putting upward pressure on prices, which aligns with the 2022 Housing Market Outlook, where RE/MAX Canada anticipated average residential prices in the Canadian real estate market to increase 9.2% this year, amidst high demand and a severe housing supply shortage.

   The next Bank of Canada interest rate announcement is scheduled for March 2, 2022.

 

Lydia McNutt, Public Relations & Content Manager, RE/MAX Canada

Lydia McNutt is an award-winning writer, editor, and public relations professional, with a focus on all thing’s real estate. At RE/MAX Canada, Lydia translates market data and trends into educational and entertaining content for homebuyers and sellers, while furthering the RE/MAX brand reach, nationally and globally.

 

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