Mortgage Blog
Bank of Canada Rate Announcement - April 10, 2024
April 10, 2024 | Posted by: Ken Fadel
As expected, the BoC has held its overnight target rate at 5.00% for a sixth consecutive time, as it continues to weigh the inflation outlook and whether the economy is slowing at a desired pace.
The Bank revised its forecast up for global GDP growth to 2.75% in 2024 and about 3% for 2025 and 2026. Inflation continues to slow across most advanced economies, although progress will not likely be smooth. Inflation rates are projected to reach central bank targets sometime in 2025.
At home, economic growth stalled in the second half of 2023. Most indicators suggest that labour market conditions continue to ease. Employment has been growing more slowly and the unemployment rate has risen gradually, reaching 6.1% in March.
Economic growth is expected to accelerate later this year, driven by both strong population growth and a recovery in spending by households. The BoC forecasts GDP growth of 1.5% in 2024, 2.2% in 2025, and 1.9% in 2026.
CPI inflation slowed to 2.8% in February, with broad-based easing in price pressures across most goods and services. However, rising rent and mortgage interest costs are keeping shelter price inflation very elevated. Core measures of inflation slowed to just over 3% in February, and 3-month annualized rates are trending downward. The BoC expects CPI inflation to be remain around 3% for first half of 2024, drop below 2.5% in the second half, and reach the 2% inflation target in 2025.
Based on this outlook, the decision was made to hold the policy rate unchanged as the BoC looks for evidence that this downward momentum in inflation is sustained. The Bank remains “resolute in its commitment to restoring price stability for Canadians.”
The next interest rate announcement is scheduled for June 5th. Expectations are growing that may be when we see our first drop since March 2020.