If you’re looking to buy, sell, or refinance, this shift in interest rates is welcome new and could work in your favor. Lower lending costs and more options for both buyers and homeowners.
Here’s a summary of what going on around the decision of this latest BOC rate cut at its last meeting and the direction rates may continue to head:
The Canada economy has grown slowly at around 2% in early 2024, but spending per person is beginning to slow down. On top of that, the job market remains soft, with a 6.5% unemployment rate. This has been tough for young people and newcomers to Canada.
Looking ahead, the economy is expected to pick up slightly, with growth estimated at 1.2% in 2024, 2.1% in 2025, and 2.3% in 2026. With lower interest rates spending is expected to increase gradually. Plus, demand for housing and business investments should also grow as the economy gets stronger.
Inflation has dropped significantly since earlier this year, falling from 2.7% in June to 1.6% in September. While housing costs are still high, they are starting to ease. Additionally, lower oil prices are bringing down gas prices. Overall, extra supply in the economy is helping lower the prices of many goods and services.
Going forward, inflation is expected to stay close to the Bank’s target. As the economy strengthens, inflation should balance out, keeping prices stable for Canadians.
If the economy continues to improve, there may be more interest rate cuts. However, the Bank of Canada will carefully watch new data and decide what’s best to keep inflation steady around 2%.
The Bank’s next (and final!) rate announcement of 2024 is coming up fast on Wednesday, December 11. There is a good chance we will see another significant cut to it key rate.
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