Announced yesterday, Canada's inflation rate INCREASED more than expected in October (+2.0% month-over-month), as compared to September (+1.6%).
This rate of price growth (inflation) is a KEY measurement tool for the Bank of Canada to decide on it's interest rate policy, and has been the main focus since Canadians have been feeling the pinch in inflation, from groceries, gasoline, and ultimately real estate prices.
The announcement, although disappointing to the BoC, followings a string of reports of better-than-expected performance to it's interest rate policies.
Although a mixed bag of estimates, the general consensus is for the BoC to trim interest rates FURTHER on December 11, 2024 (next BoC rate meeting announcement). The question becomes - by HOW MUCH will the BoC trim interest rates? For now, banks and economists are expecting a 25 to 50 bps reduction (or 0.25% to 0.50% cut). This would bring the BoC policy rate down to either 4.0% or 3.75% in December (isn't that a relief? We haven't seen rates with a 3-handle for some time now!).
Below is the relationship between interest rates and inflation in summary:
With the change in interest rates, here's a rough relationship between detached home prices in Calgary and policy rates:
Only time will tell how the rate cuts will impact our real estate market here in Calgary, but industry expects a ramp-up of demand following this last rate cut of the year, and setting us up for high demand in the Spring.
Reach out if you have any questions, or are curious on how you're best positioned on this evolving market on both the buying and selling side.