The Bank of Canada held its benchmark interest rate steady at five percent in its last three decisions of 2023. However, that was up steeply from 0.25 percent in March 2022, when the central bank decided to hike interest rates in an attempt to cool inflation.
In a series of year-end speeches, Tiff Macklem, the governor of the Bank of Canada, acknowledged that the multiple interest rate increases had indeed cut inflation (which was last measured by StatCan at 3.1 percent, year over year, in November).
So, when will interest rates fall? Economists are divided on the issue, not surprisingly. Some of them expect the Bank of Canada to lower its benchmark rate early in 2024. Others expect the central bank to wait until later in the year.
Banks have already begun to cut five-year fixed-rate mortgage rates, presumably in anticipation of rate cuts to come. And also because some 2.2 million Canadian household mortgages are due for renewal over the next two years, according to the Canada Mortgage and Housing Corp. The competition for better rates will be stiff.
