RBC economists Claire Fan and Carrie Freestone say rates are already at levels most central banks consider “restrictive” — in other words high enough toThe impact of higher borrowing costs will continue to apply the brakes to growth and RBC predicts the Bank of Canada will stay on hold as theThe labour market is also beginning to show weakness with job growth slipping lower in two of the past three months.
Inflation remains the wild card, however. Data last week for the United States showed signs inflation was cooling and tomorrow we get Canada’s latest reading on the consumer price index.Article contentto 2.8 per cent, putting it just within the Bank of Canada’s one to three per cent target range for the first time since the spring of 2021.
Economists at RBC expect inflation to tick slightly higher in July’s reading because of rising energy prices, but also expects the Bank of Canada to look beyond this volatility.RBC does not expect the Bank of Canada to begin cutting until the third quarter of 2024. It forecasts the rate will fall to 4.5 per cent in that quarter and four per cent in the final quarter of next year.
Cold comfort for Canadians facing mortgage renewal. A survey done for RATESDOTCA and BNN Bloomberg found 62 per cent of homeowners are concerned about higher payments when they renew, a 9 per cent increase from last year. And for good reason. If they renew this year or next some Canadians could see their mortgage rate double. A mortgage taken out at three per cent in 2018, would rise to 6.05 per cent if renewed this year, the highest in 16 years, said RATESDOTCA.Article content
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