The Rate Reduction We’ve Been Waiting For!
It’s the rate announcement Real Estate Enthusiasts and Toronto Real Estate Agents have been waiting for! The Bank of Canada has reduced the target for the overnight rate to 4.75%, the Bank Rate to 5% and the deposit rate to 4.75%.
In the first quarter of 2024, the global economy grew by approximately 3 percent. The US economy grew a little bit slower than was anticipated. Activity picked up during this period in Europe and China. Inflation continues to ease up in most advanced economies, however, price stability continues to be an issue across several regions. The price of oil is in line with projections and not much has changed since April regarding financial conditions.
The Canadian Economy
The Canadian economy started growing in the first quarter of 2024 after slowing in the second half of last year. The economy grew less than expected with only an increase of 1.7%. The slow growth is somewhat attributed to businesses investing less money into inventory. Consumer spending grew by approximately 3% and housing activity slightly went up. Businesses continue to hire, however, job growth is outpaced by the number of people who are of age to work. As most of you already know, wages are not rising like they once did. Recent reports overall suggest that the economy has more supply than demand.
The Consumer Price Index dropped to 2.7% in April along with the core inflation measure which slowed for three months, indicating a continued decline. The CPI is close to its historical average, however, shelter price inflation remains high.
As we are seeing signs that inflation is slowing, the Government decided to ease up and lowered the policy interest rate by 0.25%. According to recent data, experts believe that we are moving towards our 2% target, however, there are still risks. As Council continues to closely monitor our economy, the Bank of Canada is committed to achieving stable prices for Canadians.
Our team of real estate agents is closely watching the overnight rate target. If you are planning to buy, sell or invest and need some advice on shopping for a mortgage, please reach out to one of our realtors and we will point you in the right direction! Stay tuned, as the next announcement is around the corner on July 24, 2024.
Sources: https://www.bankofcanada.ca/
