The Crystal Ball Says…

No rate increase and perhaps a rate decrease by the Bank of Canada coming up on September 3rd. Why is that, you might ask? Simply because growth in the economy has slowed and inflation has also come down. A rate increase would slow the economy more and would reduce inflation as well, which isn’t bad in itself, but not necessary if the market is taking care of it already.

A rate decrease might be pre-mature as inflation is still above the 2% target rate that the BOC aims for, but we might see one later in the fall. I think the market has already forecasted this as fixed-rate mortgages have come down in the last week, and they seem to be a leading indicator of what the Bank of Canada intends to do.

Good news for borrowers in variable or adjustable rate mortgages or lines of credit.

The National Post has an article on this very subject.