Bank of Canada Rate Announcement - March 2023
Bank of Canada Rate Announcement - March 2023
Date Posted: March 8, 2023
The Rate Increase
As widely expected, BOC has announced it will hold its target for the overnight rate at 4.50%. After eight consecutive increases, inflation is beginning to come down and the BOC has acknowledged that a pause to rate increases was the right decision.
The hold on rates was expected by the market and was already built into the longer-term bond market pricing. The bond market has been declining while remaining optimistic that the central bank would pause further interest rate hikes, which it effectively has done. This is great for consumers as we see downward pressure on the fixed term interest rates.
What Does This Affect?
The Bank of Canada’s target overnight policy rate affects the interest you pay from lenders like banks. The higher the overnight rate, the more interest you’ll pay. The increase of 0.25% means that for some variable-rate mortgages more of the money you pay each month will be going to interest rather than the principal while other variable-rate mortgages will see an increase to the monthly payment.
Getting Back on Track
The bank predicts Canada’s economy grew by 3.6% in 2022, slightly stronger than was projected in October. Inflation has declined from 8.1% in June to 6.3% in December. Year-over-year measures of core inflation are still around 5%, but 3-month measures of core inflation have come down, suggesting that core inflation has peaked.
If you have questions about your own mortgage, and the best strategy for you, please contact your broker today.
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