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BCREA ECONOMICS NOW Bank of Canada Interest Rate Announcement - April 18, 2018 The Bank of Canada decided to leave the target for the overnight policy rate unchanged at 1.25 per cent this morning. In the statement accompanying the decision, the Bank noted that inflation is forecast to be slightly higher in 2018 than originally expected but will return to the Bank's 2 per cent target once the impact of higher gas prices and minimum wage increases dissipate. While the mortgage stress test has been a contributor to weaker growth in the first quarter of 2018, the Bank expects the economy to be operating at above potential over the next three years, growing at an average rate of about 2 per cent. Although the Bank held steady today, with inflation rising to the Bank's two per cent target and many Canadian firms operating at or near capacity, interest rates are very likely headed higher this year. Headwinds from the trade sector have moderated, energy prices are higher and growth for the first quarter appears to be firming after a slow start. Given those trends, the Bank is likely to adjust its policy rate higher in coming months. That will translate to higher mortgage rates which, combined with the erosion of purchasing power from the mortgage stress test, will temper housing demand in 2018. For inquiries regarding statistical and economics-related news releases, please contact:
Cameron Muir; Chief Economist, 604.742.2780, cmuir@bcrea.bc.ca Brendon Ogmundson; Economist, 604.742.2796, bogmundson@bcrea.bc.ca The Housing Market Update video webcast is produced monthly by the British Columbia Real Estate Association. Real estate boards, real estate associations and REALTORS® may reprint this content, provided that credit is given to BCREA by including the following statement: "Copyright British Columbia Real Estate Association. Reprinted with permission." BCREA makes no guarantees as to the accuracy or completeness of this information. Copyright© British Columbia Real Estate Association 1420 – 701 Georgia Street West PO Box 10123, Pacific Centre - Vancouver, BC V7Y 1C6 Phone 604.683.7702, Fax 604.683.8601 www.bcrea.bc.ca bcrea@bcrea.bc.ca Comments are closed.
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