Inflation Fell in January but when will we see Interest Rate cuts?

(February 21, 2024 )

REAL ESTATE NEWS

Wednesday, February 20, 2024 


Inflation fell in January but when will we see Interest rates cut? 

The annual rate of inflation dropped half a percentage point in January to finish at 2.9%, due mostly to a decline in gas prices, some grocery costs and airfares.

 "It was good news for consumers, for businesses and for the Bank of Canada," said Tu Nguyen, economist with RSM Canada. "I think that this January report shows that we're heading in the right direction." 

But although there is progress elsewhere, what about the housing market? 

The Bank of Canada has a clear goal of cooling inflation down to 2% before interest rate cuts are expected, likely still in June/ July of this year. 

Rising mortgage and rental costs continued to increase Shelter inflation last month, rising to 6.2% Nguyen says that, stripping out the shelter component, annual inflation would be back at 1.5%. Without mortgage costs, inflation is right at 2%. 

"The question for the bank moving forward would be how much they want to factor in housing and housing prices... when making their decisions," Nguyen says 


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