The Bank of Canada held its overnight rate at 5% which was widely expected as the economy shows signs of slowing down. The Bank did leave the door open to the possibility of further interest rate hikes in the future, noting the “persistence of underlying inflationary pressures.“
CPI inflation eased back to 2.8% in June, before rising to 3.3% in July, which is somewhat in line with the Bank’s 3% projection. “The longer high inflation persists, the greater the risk that elevated inflation becomes entrenched, making it more difficult to restore price stability,” according to the Bank’s interest rate announcement.
Rising interest rates have had a tangible impact on the Canadian housing market this year, a trend that’s expected to continue through the fall, according to the RE/MAX 2023 Fall Housing Market Outlook Report. RE/MAX brokers and agents across Canada are reporting that both the interest rate climate and lack of inventory are likely to result in a softer market, with average prices expected to remain flat for the remainder of 2023.