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Interest rate news and analysis by Jeff Laberge
Dec. 17, 2024 - Inflation down to 1.90%
Inflation once again came in below the Bank of Canada’s 2.00% target rate.
Canada’s inflation rate fell to 1.90% in November, which was lower than economists had anticipated.
The largest increase was again found in shelter costs, with the price of rent up 7.70% over the year, coming in higher than October’s numbers. Despite the large increase in rent prices, total shelter costs, which includes mortgage interest were up 4.60% due to declining interest rates.
The increase in the price of groceries has slowed to 2.60% over the span of the year, however, overall grocery prices have risen 19.60% since 2021. The slowed pace of food costs is certainly welcomed since bringing down the cost of essential goods is much more difficult that non-essential goods.
Non-essentials such as clothing, footwear, recreation, education, and reading all saw negative increases. These being perhaps the most non-essential of the items, shows the reduction in spending by Canadians who are feeling the pinch of higher prices.
Overall this dip in inflation paves way for further interest rate cuts by the Bank of Canada.
Dec. 11, 2024 - Bank of Canada lowers key interest rate by 50 basis points.
The Bank of Canada today lowered their key interest rate by 50 basis points (0.50%), bringing the Prime rate with most lenders down to 5.45%. This falls in line with what most analyst were predicting. There was mention of the possibilty of inflationary pressure which could be caused by tariffs imposed by the U.S., but as Governor Macklem stated "we can't run policy on something that might happen."
Government bond yields, which are the basis for fixed mortgage rates in Canada, are up over the span of the day, however this is because the yields spiked downward when the announcement came, and hit a previous low price which caused a "bounce" as investors bought and sold bonds in order to stop losses or take profits (as seen in the image). The yields should continue downward once investors completed these moves.
Oct. 23, 2024 - Bank of Canada lowers key interest rate by 50 basis points
The Bank of Canada lowered the overnight rate by 50 basis points as most economists expected, bringing the Prime Rate down to 5.95%. This move provides some relief to borrowers in variable rate mortgages as well as for those who have lines of credit