On January 25th the Bank of Canada released its latest report and for the 8th time in a row increased their policy rates.
As expected, the increase was only a quarter of a percent (+0.25%), ultimately bringing the Prime Rate to 6.70%. For comparison, the last time the Prime Rate was this high was in February of 2001 at 7.25%, so about 22 years ago.
Since the Great Recession of 2008, when the Prime Rate dropped to 2.25%, the highest the Prime Rate ever got was 3.95% in July 2018. It came down to 2.45% in March 2020 and is no up at 6.70%.
There was definitely a sense of optimism seen in the report. Here are the major take aways from the report:
Inflation has declined from 8.1% in June to 6.3% in December.
Year-over-year measures of core inflation are still around 5%, but 3-month measures of core inflation have come down, suggesting that core inflation has peaked.
Inflation is projected to come down significantly this year. Lower energy prices, improvements in global supply conditions, and the effects of higher interest rates on demand are expected to bring CPI inflation down to around 3% in the middle of this year and back to the 2% target in 2024.
In addition, the bond market has also been indicating a downward trend in rates over the past months.
What do think? Was this the last rate increase? We certainly hope so and finally, it is starting to look so!
Do you have any questions?
Reach out to our team of experienced professionals at Access My Home Equity today for a free consultation:
Email: info@accessmyhomeequity.ca
Phone: 604-362-4467
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