What to expect from the upcoming Bank of Canada announcement

The Bank of Canada is scheduled to issue an interest rate update on Wednesday, March 8, marking the second such announcement of 2023.

In 2022, the bank hiked its interest rate seven times. In January 2023, another increase followed, bringing the key rate to 4.5%. Throughout its rate hike updates, the Bank of Canada has repeatedly cited inflation as the core reason for its decisions.

Now, experts anticipate a bit of a slowdown with a rate hold next week.

Ratehub.ca co-CEO and president of CanWise mortgage lender James Laird is certain that the bank will hold the key overnight rate at 4.5%. He shared his thoughts with Daily Hive.

“Next week’s announcement should provide insights into how committed the Bank is to leaving rates unchanged going forward,” Laird told us in an email.

“This is the Bank’s chance to comment on all of the economic and inflation data they have received since their last announcement in January.”

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Impact on Canadian homeowners

Laird says that people with variable-rate mortgages, and anyone with a home equity line of credit (HELOC), will be hoping that the bank leaves the rate unchanged and that it will remain that way.

“Fixed-rate mortgages will change based on the bank’s forward commentary. If the bank alludes to the need to hike rates further, we will see bond yields rise and fixed rates will follow,” he said.

“Anyone shopping for a home should get a pre-approval to hold today’s rates for up to 120 days. This will allow them to secure today’s rates, and if rates drop further, they will still be eligible for the lower rates.”

Impact on home prices

Laird believes that if the bank shows conviction in holding the rate in the future, it could provide support for home values,

“If the Bank alludes to further rate hikes, this will put downward pressure on home values across Canada,” he concluded.

Have interest rake hikes helped Canadians so far?

In an announcement on February 8, the Bank of Canada said its robust interest rate hikes so far have had the following effects:

Borrowing rates have gone up for households and businesses.

• • Spending has declined, especially on housing and big-ticket items like furniture and appliances.
  • The job market is tight, but small signs indicate that higher rates are starting to cool it down.
  • Inflation is falling too — partly thanks to lower global energy prices and improved supply chains, but also thanks to lower demand here in Canada.
  • Fewer businesses think high inflation will last. That matters because expectations about inflation affect decisions on prices and wages.

If you’re a homeowner or are hoping to buy a home in Canada at some point, share your thoughts with us in the comments below.