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Interest rate news and analysis by Jeff Laberge
Jan. 21, 2025 - Inflation down to 1.80%
The inflation rate in Canada fell to 1.80% in December, well below the Bank of Canada's 2.00% target rate.
Assisting in bring the rate of inflation down was the GST holiday, which reduce the cost of certain designated items.
Items that increased in price year over year included gasoline and shelter costs, which are both expected to decline in the future.
Overall the latest inflation statistics allow the Bank of Canada to continue lowering interest rates going forward.
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