There's been a lot of speculation in financial markets, with most economists convinced the Bank of Canada would begin cutting the Key Rate. And finally, on June 5th, the BoC did cut the Key Rate by .25%.

Yes, Canada’s inflation rates have edged lower.  In May it was announced that April inflation cooled to 2.7% and it’s projected to have cooled even more in May. The Bank of Canada had been looking for inflation to have tamed sufficiently, and this cut signifies that the BoC is now rather confident that monetary policy is achieving the desired outcomes.

Employment & other key economic data have, in tandem, cooled toward the range of Bank of Canada goals. However, the same data from our southern neighbour continues to trend higher than the U.S. Fed is looking to see as a signal to trim U.S. rates.

On June 12th, the U.S. Federal Reserve announced that the Benchmark Rate would continue to hold in the range of 5.25% to 5.5% even as their year-on-year inflation dipped to 3.3% in May, down just a bit from 3.4% in April. Not a big enough shift for the U.S. Fed to make a move.

With the neutral tone accompanying the Bank of Canada’s announcement, economists are now focusing on how quickly the BoC will continue to move rates lower. Chances are the BoC will wait to see if the economy and housing markets hum along or re-ignite and, as well, watch for U.S. rate move signals. 

In the meantime, we are seeing lower mortgage rates and that will likely impact housing markets. Buying? Selling? Or just wondering what’s trending in the neighbourhood? Let’s talk.