Residential Market Commentary - September 11, 2017
2017-09-13 | 09:21:31
The Bank of Canada moves forward with another rate increase.
In a move that was not unexpected, but was poorly communicated, the Bank of Canada pulled the trigger on another interest rate increase. When the 0.25% hike came on Wednesday only about half of the market was ready for it. The other half had its sights set on an increase next month. There was confusion, and the market hates confusion.
Now forecasters are trying to figure out if there will be another hike before the end of the year. The Bank of Canada says it is making its rate decisions based on the economic data, in this case the much higher than expected growth in Q2 GDP. In the statement released along with the rate increase announcement, the bank left the door wide open for another hike in 2017. But it also said it will be watching to see how heavily indebted Canadians adjust to higher rates. The next dates for rate announcements are October 25th and December 6th.
The move also has economists recalculating their forecasts for the upper end of the central bank’s target rate. The broad expectation saw the rate topping out at 1.5% in 2018. Some market watchers are now pushing that up to 1.75% and 2.0%.