On July 12, the Bank of Canada announced a further increase in its key interest rate to 5%. Like other interest rate hikes since 2022, this one is part of an attempt to bring inflation back down to the 2% target.
As this is a subject that directly affects homeowners and future homeowners, I’d like to take this opportunity to give you an overview of the current inflation situation in Canada, as well as the forecasts for the months ahead.
Optimistic Forecasts
According to its latest Monetary Policy Report, the Bank of Canada is optimistic about the fight against inflation.
After peaking at 8.1% last summer, inflation stood at 3.4% in May. Although a return to the 2% inflation target is anticipated, the economy is stronger than expected, which will prolong the process.
In the first quarter of this year, consumer spending was remarkably strong, underpinned by high labor demand, solid population growth and substantial savings. These conditions exerted pressure on prices, despite some signs of a slowdown in economic activity.
However, the Bank of Canada expects the economy to slow in the second half of this year and the first half of 2024, largely due to the effects of higher interest rates. These measures are being implemented to contain demand and mitigate inflationary pressures.
Medium-Term Outlook
As demand moderates and supply gradually recovers, the Bank of Canada expects inflation to gradually return to its 2% target by mid-2025. The aim is to maintain a delicate balance between stimulating the economy and keeping inflation under control to ensure stable, sustainable growth.
Although the economy has shown surprising strength, measures are being taken to curb demand and contain inflationary pressures.
By forecasting a return to the inflation target by mid-2025, the Bank aims to ensure solid, balanced economic growth for the future.
A Solution Tailored to Your Situation
Is your mortgage about to expire? Whatever your situation, there are several solutions for you. I’ve recently helped clients with mortgage renewals, refinancing and debt consolidation.
If you’re currently in this situation, I’d be happy to help you explore your options. Contact me to discuss!
Estrie: (819) 333-7184
Greater Montreal: (514) 717-6034
Do you need advice to guide you in obtaining your mortgage, or would you simply like to learn about other hot topics in the business world? I invite you to visit my blog!
