Further interest hike by the BoC for 2022

Are we on the right track?

The Bank of Canada increased its target for the overnight rate to 4.25%. Another 50 basis points were added, hoping to curb the inflation further and get closer to the target inflation rate of 2%. The CPI (Consumer Price Index) currently sits at 6.9%, roughly 4.9% higher than the BoC would like it to be. Measures of the core inflation remain around 5% and therefore around 3% higher than the target rate.

Despite the slow down of inflation, Tiff Macklem indicates, that more has to be done if the numbers don't get rained back in with the current policy. For now the BoC expects that growth will stall through the end of the year and the first half of next year, but they are prepared, if this scenario doesn't emerge and inflation remains high.

What does all of that mean for us. Well, domestic consumption of goods and the appetite for it has shown to decline and the housing market is feeling all of the bank's interest rate increases in form of falling prices and falling demand for most types of housing. The rental market is in many jurisdictions the only market, that doesn't feel any effects. With fewer investors ready to invest it almost seems, that in some areas the upward pressure on rents is even being strenghtened by the measures taken from the Bank of Canada.

If you are unsure what to do, please reach out to our real estate experts here at the IMPACT Real Estate Group to help guide you through these uncertain times and ensure that you have all the information necessary to make good real estate decisions for you and your family here in the Fraser Valley. We are happy to help.