Bank of Canada Rate update - March 6th, 2024

Mar 06, 2024By Snezhana Todorova
Snezhana Todorova

Today, the Bank of Canada decided to keep its main interest rate steady at 5.0%. They're worried about prices going up too fast (inflation), even though the Consumer Price Index only rose by 2.9% in January. Here's a summary of what the Bank said:

In Canada:

- The cost of housing is still high and is the main reason why prices are going up.
- Prices for other things are also going up by about 3% to 3.5% each year.
- Canada's economy grew a bit more than expected last year, but it's still not doing as well as it could.
- People are spending a little more, but businesses aren't investing as much.
- More goods are being sold overseas, which is helping the economy.
- Not as many people are getting jobs compared to the number of people who want them.
-The Bank thinks there's still too much stuff available compared to how much people want to buy.

In the world:

- The global economy slowed down at the end of last year.
- The United States is doing okay, but Europe is struggling.
- Prices in the U.S. and Europe are not rising as fast.
- Interest rates have gone up a bit, but loans for businesses are becoming cheaper.
- Stock markets are doing well.
- Oil prices are a bit higher than expected.

Looking ahead:

The Bank thinks prices will stay high for the first part of this year before coming down a bit. They're worried about prices staying high for too long.

High interest rates are causing households to spend less on non-essential items when they renew their mortgages, facing higher monthly payments. As the economy slows down in the first half of this year, the Bank of Canada (BoC) is expected to hint at easing its policies. This could occur at the next meeting on April 10, where policymakers will update economic projections, potentially paving the way for a rate cut in June.

If your mortgage is coming up for renewal soon - reach out to us at [email protected] to discuss your options.