{"id":20262,"date":"2022-07-18T11:11:00","date_gmt":"2022-07-18T18:11:00","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=20262"},"modified":"2022-07-13T10:06:47","modified_gmt":"2022-07-13T17:06:47","slug":"bank-of-canada-rate-hikes-had-a-notable-impact-on-bcs-housing-market","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2022\/07\/bank-of-canada-rate-hikes-had-a-notable-impact-on-bcs-housing-market\/","title":{"rendered":"Bank of Canada Rate-Hikes Had A Notable Impact on BC\u2019s Housing Market"},"content":{"rendered":"<p style=\"text-align: justify;\">Coming off two back-to-back hikes of 50 basis points earlier this year, the Bank of Canada has unexpectedly followed up with its highest rate-hike since 1998.<\/p>\n<p style=\"text-align: justify;\">The country\u2019s central bank revealed Wednesday it was hiking its overnight rate by 100 basis points in a bid to tamp down on inflation, which shot up to 7.7% in May.<\/p>\n<p style=\"text-align: justify;\">Economists had widely expected the Bank of Canada would hike its key rate by 75 basis points. Instead, the central bank blew right on past that amid soaring inflation after its counterpart in the US, the Federal Reserve, hiked its own overnight rate 75 basis points last month.<\/p>\n<p style=\"text-align: justify;\">\u201cAn increase of this magnitude in one meeting is very unusual,\u201d Bank of Canada governor Tiff Macklem said in a press conference an hour after the rate decision was released, adding a rate-hike of 100 basis points reflects \u201cvery unusual economic circumstances.\u201d<\/p>\n<p style=\"text-align: justify;\">Macklem said boosting the rate so quickly is meant to prevent high inflation from becoming \u201centrenched.\u201d<\/p>\n<p>\u201cWe need to cool the economy,\u201d he said.<\/p>\n<p style=\"text-align: justify;\">\u201cIn terms of the surprise &#8230;.. we had indicated that we were prepared to be more forceful. Today was more forceful.\u201d<\/p>\n<p style=\"text-align: justify;\">After four consecutive rate hikes since the start of the year, the latest policy decision brings the overnight rate to 2.5%.<\/p>\n<p style=\"text-align: justify;\">The Bank of Canada said in its decision that inflation is higher and more persistent than it expected when it released an April policy report. It now expects inflation to remain around 8% over \u201cthe next few months.\u201d<\/p>\n<p style=\"text-align: justify;\">\u201cLabour markets are tight with a record low unemployment rate, widespread labour shortages and increasing wage pressures. With strong demand, businesses are passing on higher input and labour costs by raising prices,\u201d the central bank said in its latest policy decision.<\/p>\n<p style=\"text-align: justify;\">\u201cWith the economy clearly in excess demand, inflation high and broadening, and more businesses and consumers expecting high inflation to persist for longer, the Governing Council decided to front-load the path to higher interest rates by raising the policy rate by 100 basis points today.\u201d<\/p>\n<p style=\"text-align: justify;\">The Bank of Canada said it expects inflation to start to \u201ccome back down later this year\u201d before easing to around 3% by the end of 2023 and returning to a target of 2% by the end of 2024.<\/p>\n<p style=\"text-align: justify;\">\u201cIf this is indeed \u2018front loaded\u2019, then it may not be followed with another 1% move in September and we could see something back in the 50-75 basis point range, although, that would still mean it&#8217;s a supersized summer,&#8221; TD senior economist James Orlando said in a note.<\/p>\n<p style=\"text-align: justify;\">Rate-hikes so far this year have already had a notable impact on BC\u2019s real estate industry.<\/p>\n<p style=\"text-align: justify;\">Home sales across the province plummeted 35.7% in June compared with a year earlier as mortgage rates have shot up amid ongoing rate-hikes in 2022, according to data from the BC Real Estate Association (BCREA).<\/p>\n<p style=\"text-align: justify;\">\u201cWhile a still growing economy and robust population growth point to strong demand, it is increasingly difficult to satisfy that demand at current interest rates,\u201d BCREA chief economist Brendon Ogmundson said in a July 12 statement.<\/p>\n<p style=\"text-align: justify;\">Carolyn Rogers, the Bank of Canada\u2019s senior deputy governor, said recent homebuyers who\u2019ve tapped variable rates are no doubt \u201cbeing squeezed.\u201d<\/p>\n<p style=\"text-align: justify;\">\u201cBut that is a small segment of the population. Not to minimize the effect on that segment,\u201d she said, adding housing prices have been \u201cunsustainably high\u201d for the last year.<\/p>\n<p><a href=\"https:\/\/biv.com\/article\/2022\/07\/bank-canada-unexpectedly-hikes-key-rate-one-full-point\" target=\"_blank\" rel=\"noopener\">Bank of Canada Unexpectedly Hikes Key Rate One Full Point<\/a> by Tyler Orton | BIV<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Coming off two back-to-back hikes of 50 basis points earlier this year, the Bank of Canada has unexpectedly followed up with its highest rate-hike since 1998. The country\u2019s central bank &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2022\/07\/bank-of-canada-rate-hikes-had-a-notable-impact-on-bcs-housing-market\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-20262","post","type-post","status-publish","format-standard","hentry","category-mortgage"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Bank of Canada Rate-Hikes Had A Notable Impact on BC\u2019s Housing Market &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2022\/07\/bank-of-canada-rate-hikes-had-a-notable-impact-on-bcs-housing-market\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Bank of Canada Rate-Hikes Had A Notable Impact on BC\u2019s Housing Market &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"Coming off two back-to-back hikes of 50 basis points earlier this year, the Bank of Canada has unexpectedly followed up with its highest rate-hike since 1998. 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