Central bank is due to announce first rate decision of the year on January 24
The Bank of Canada's January 24 interest rate announcement is poised to maintain the status quo with another “hold” decision, according to James Laird, co-CEO of Ratehub.ca.
“It will be a shock if the Bank of Canada announces anything but a hold to the key overnight rate,” Laird said.
A major driver of this likely decision is the latest annual inflation reading of 3.4% in December, which was markedly higher than the 3.1% seen in November.
“With the recent higher-than-expected inflation data, it will be interesting to see if [the BoC is] ‘prepared to raise the policy rate further if needed,’ which they stated in previous announcements, but dropped in December’s announcement,” Laird said.
“If the bank is considering raising rates further, expect bond yields to push up and fixed rates to rise.”
The Bank of Canada is considering a potential interest rate cut in 2024, but Governor Tiff Macklem emphasized the need for sustained downward momentum in core inflation for several months before making a decision.https://t.co/HdKTYqFyOc#mortgagenews #ratehike #interestrates
— Canadian Mortgage Professional Magazine (@CMPmagazine) December 19, 2023
While the central bank has not ruled out the prospect of future rate hikes, recent indications imply that such increases may be put on hold.
“The tone of this announcement will influence whether the housing market gets off to a strong start,” Laird said. “Discussion of rate hikes will mean a sluggish start to real estate activity in 2024.”
Canadians who have variable-rate mortgages or home equity lines of credit (HELOCs) “can expect their rate to remain unchanged, but will be reading the bank’s language closely to see if a rate hike or rate cut is more likely moving forward,” Laird added.
At the same time, “with upward pressure on fixed rates, getting a pre-approval is a great idea,” he said.
