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Bank of Canada Rate Announcement Jul 12th, 2023

James Loewen • July 12, 2023

Bank of Canada raises policy rate 25 basis points, continues quantitative tightening.

FOR IMMEDIATE RELEASE

Media Relations

Ottawa, Ontario

July 12, 2023

The Bank of Canada today increased its target for the overnight rate to 5%, with the Bank Rate at 5¼% and the deposit rate at 5%. The Bank is also continuing its policy of quantitative tightening.

Global inflation is easing, with lower energy prices and a decline in goods price inflation. However, robust demand and tight labour markets are causing persistent inflationary pressures in services. Economic growth has been stronger than expected, especially in the United States, where consumer and business spending has been surprisingly resilient. After a surge in early 2023, China’s economic growth is softening, with slowing exports and ongoing weakness in its property sector. Growth in the euro area is effectively stalled: while the service sector continues to grow, manufacturing is contracting. Global financial conditions have tightened, with bond yields up in North America and Europe as major central banks signal further interest rate increases may be needed to combat inflation.

The Bank’s July Monetary Policy Report (MPR) projects the global economy will grow by around 2.8% this year and 2.4% in 2024, followed by 2.7% growth in 2025.

Canada’s economy has been stronger than expected, with more momentum in demand. Consumption growth has been surprisingly strong at 5.8% in the first quarter. While the Bank expects consumer spending to slow in response to the cumulative increase in interest rates, recent retail trade and other data suggest more persistent excess demand in the economy. In addition, the housing market has seen some pickup. New construction and real estate listings are lagging demand, which is adding pressure to prices. In the labour market, there are signs of more availability of workers, but conditions remain tight, and wage growth has been around 4-5%. Strong population growth from immigration is adding both demand and supply to the economy: newcomers are helping to ease the shortage of workers while also boosting consumer spending and adding to demand for housing.

As higher interest rates continue to work their way through the economy, the Bank expects economic growth to slow, averaging around 1% through the second half of this year and the first half of next year. This implies real GDP growth of 1.8% in 2023 and 1.2% in 2024. The economy will move into modest excess supply early next year before growth picks up to 2.4% in 2025.

Inflation in Canada eased to 3.4% in May, a substantial and welcome drop from its peak of 8.1% last summer. While CPI inflation has come down largely as expected so far this year, the downward momentum has come more from lower energy prices, and less from easing underlying inflation. With the large price increases of last year out of the annual data, there will be less near-term downward momentum in CPI inflation. Moreover, with three-month rates of core inflation running around 3½-4% since last September, underlying price pressures appear to be more persistent than anticipated. This is reinforced by the Bank’s business surveys, which find businesses are still increasing their prices more frequently than normal.

In the July MPR projection, CPI inflation is forecast to hover around 3% for the next year before gradually declining to 2% in the middle of 2025. This is a slower return to target than was forecast in the January and April projections. Governing Council remains concerned that progress towards the 2% target could stall, jeopardizing the return to price stability.

In light of the accumulation of evidence that excess demand and elevated core inflation are both proving more persistent, and taking into account its revised outlook for economic activity and inflation, Governing Council decided to increase the policy interest rate to 5%. Quantitative tightening is complementing the restrictive stance of monetary policy and normalizing the Bank’s balance sheet. Governing Council will continue to assess the dynamics of core inflation and the outlook for CPI inflation. In particular, we will be evaluating whether the evolution of excess demand, inflation expectations, wage growth and corporate pricing behaviour are consistent with achieving the 2% inflation target. The Bank remains resolute in its commitment to restoring price stability for Canadians.

Information note

The next scheduled date for announcing the overnight rate target is September 6, 2023. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the Monetary Policy Report on October 25, 2023.

Read the July 12th, 2023 Monetary Policy Report

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James Loewen

Top Factors to Consider When Choosing a Mortgage Broker in Canada

By james loewen • November 21, 2024

Top Factors to Consider When Choosing a Mortgage Broker in Canada In Canada, buying a house can be exciting yet daunting, especially when thinking of the best mortgage to choose. One of the best ways to make this process easier is by engaging an experienced mortgage broker in Canada. These are professionals who work by connecting you to lenders so that you can find the best loan option available for you. Their vast knowledge of the mortgage sector enables them to help you get the best offers possible. But how do you go about choosing the right mortgage broker from the many available? Factors to Consider When Choosing Mortgage Brokers: Looking to choose mortgage broker? Here are the factors to consider: 1. Experience and Expertise In terms of mortgage broker factors , choosing a mortgage broker, the first important aspect to examine is their experience. This is because the Canadian mortgage sector is quite multifaceted with many laws, rules, and lender union characteristics. An experienced broker is likely well versed in these intricacies and will provide such advice depending on individual financial capabilities. Ask for how long they have been in the business and how many clients they have successfully assisted. Also, a seasoned mortgage loan officer usually has established relationships with many lenders, which in turn will offer better options for you. Most of the time, even more useful information will be when a mortgage broker works in a particular niche. For example, first time home buyer Burlington or the local property market of Hamilton or Milton would be niches where the expertise will come in handy. Need help to choose the best mortgage broker in Canada? Contact us at Loewen Group to get mortgage broker tips and services. Call (289) 337-4029 or start here . 2. Range of Lenders and Products An adept mortgage brokerage firm must have access to several lenders as well as different mortgage options. It is because mortgage broker in Hamilton are on good terms not only with banks and credit unions but also with private lending firms, so they will definitely help in finding the most suitable loan according to the client’s needs as well as their financial capabilities. Also, it is more likely that favorable terms for the loan and adequate interest rates are available when a broker has contacts with several lenders instead of one or two. Ask the broker what type of lenders they work with. Brokers with a larger network tend to be able to provide more options than those who are limited to a few lenders. Be sure also to ask if they have such product capabilities or that they have worked with certain types of lenders. 3. Reputation and Reviews Research and analyze the feedback on the best mortgage broker in Canada. Look for online appraisals on Google, social networks, and other further sites, as well as testimonies of their previous clients. An ideal mortgage broker will always have great reviews from clients who appreciate the broker’s skill and results. If family members, friends, or coworkers have ever used the services of a specific broker and were pleased with the outcome, do not hesitate to request contacts. It is more likely that a trustworthy and reputable mortgage broker in Hamilton, Milton, or Burlington will provide great service and navigate you through the mortgage process seamlessly. 4. Knowledge of Government Programs and Incentives Canada has many programs designed to help young starters, in particular first-time homebuyers. A good broker would know these plans and help you make use of those available to you. For instance, should you be purchasing in Burlington, Hamilton, or Milton, they may know of local initiatives in Ontario such as the Home Buyers’ Plan HBP or even the First-Time Home Buyer Incentive. Ask the potential brokers if they are aware of the schemes and if they have helped clients to access them in the past. You can save on expenses and eschew difficulties in buying a home by engaging the services of a broker who is knowledgeable about government support programs. 5. Local Market Knowledge Market research at the local level can considerably impact one’s decision on acquiring a property. Be it Burlington, Hamilton, Milton, or any other area, a mortgage broker Milton with extensive experience in the given region will be aware of the community features, range of the properties, and prevailing tendencies that affect the mortgage or home buying schedule. He or she probably has turned into contacts with banks, appraisers, and real estate agents, thus further shortening the time frame. Conclusion A crucial first step in the home-buying process is selecting the appropriate mortgage broker Burlington . You may discover a broker who meets your demands and will strive to get you the best mortgage by taking into account elements like experience, reputation, variety of lenders, customer service, and local knowledge. Taking the time to do your homework and make an informed decision can make all the difference, whether you're a first-time purchaser in Burlington, searching for the finest mortgage broker tips, or considering your alternatives in Milton. A knowledgeable, experienced broker will help you comprehend your alternatives, walk you through the mortgage process, and make sure your mortgage fits your long-term financial objectives.