Statistics Canada announced on Tuesday this week that Canada’s annual inflation rate shot to a two and a half year high in March, prompting speculation about an interest rate hike from the Bank of Canada.
The report showed annual inflation was 3.3% in March, while core inflation, which factors out volatile items such as energy and food prices, was 1.7%. Economists had been expecting an annual inflation number of 2.8%, and a core rate of 1.2%.
Given the Bank’s target for Core Inflation is 2% they will keep a sharp eye on the next CPI report from Statistics Canada as it comes just before the next Policy Announcement to be issued at the end of May. If Core inflation jumps above 2% this might prompt them to raise their overnight lending rate, which in turn will increase the Prime Rate.
The bank last raised its interest rate in September from 0.75% to 1%. Most economists expect the bank will keep interest rates unchanged during its policy decision at the end of May as it will likely prefer to err on the side of inflation rather than stall the economy and send our Loonie to $1.05 USD territory. That would cause a lot of lost jobs in Canada, which is the last thing the Bank wants.
If you are wondering if you should go fixed or variable make sure you talk to one or our Mortgage Specialists as we can provide you with historical information that will help you make your decision!
Warm regards,
Chris
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Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
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