Three more overnight interest rate increases by the Bank of Canada (BoC) can be expected before the end of 2022, which will have ripple effects across the Canadian economy including housing demand and prices.
According to comparison website Finder’s pooling of opinions by experts with Canada’s private financial institutions, the majority anticipate there will be another three rate raises later this year — most likely in July and September for the next two.
This follows today’s announced rate increase of 0.5% to reach a rate of 1.5%, and it is a move to put a real damper on inflation, which reached 6.8% in the month of April alone — well above the BoC’s previous forecast.
The pandemic-time low rate of 0.25% continued into early 2022 as a measure to stimulate the economy by encouraging borrowing and the resulting investment activity. But with rampant inflation across consumer goods and fuelling escalating home prices earlier this year, BoC increased the rate for the first time in five years to 0.5% in March, and then to 1% in April.