{"id":18904,"date":"2022-03-02T16:16:25","date_gmt":"2022-03-02T21:16:25","guid":{"rendered":"https:\/\/www.zoocasa.com\/blog\/?p=18904"},"modified":"2022-03-02T16:16:27","modified_gmt":"2022-03-02T21:16:27","slug":"boc-march-2022","status":"publish","type":"post","link":"https:\/\/www.zoocasa.com\/blog\/boc-march-2022\/","title":{"rendered":"The Bank of Canada Raises Rates: What You Need to Know"},"content":{"rendered":"\n

Today the Bank of Canada increased its Overnight Lending Rate by 25 basis points<\/a>, the first increase we\u2019ve seen since the start of the COVID-19 pandemic.

The Central Bank had previously slashed the trend-setting rate by 150 basis points when the pandemic broke out to support the economy, bringing rates down to an all-time low. However, with economic recovery well underway and inflation at its highest since 1991, the Bank kicked off the tightening cycle it signaled was coming in its January announcement<\/a>.

This rate increase was highly anticipated by financial experts and is expected to be one of the many hikes we see this year. This was confirmed by the Bank today, which said \u201cas the economy continues to expand and inflation pressures remain elevated, the Governing Council expects interest rates will need to rise further.\u201d

The Bank has again signaled its commitment to return back to its 2% inflation target, a significant decrease from the current level of 5.1%;  however, they noted in their most recent announcement that inflation is likely to stay elevated in the near term.

While the Bank had previously attributed many of the inflationary pressures the country is currently experiencing to short-term supply chain issues caused by the pandemic, the Russian invasion of Ukraine, and subsequent geopolitical and economic consequences of the event, could cause long-term inflation and impact to commodity prices and availability. The Bank will be closely watching the event to determine the best course of action for Canadian Monetary Policy. <\/p>\n\n\n\n

Despite heightened global pressures, the Canadian economy is outperforming the bank\u2019s expectations. Q4 of 2021 was the strongest quarter of that year, at 6.7%, outmatching the bank\u2019s projections in the January Monetary Policy Report. Overall, growth for the first quarter of 2022 is looking stronger than expected as well.<\/p>\n\n\n\n

What Do Rising Rates Mean for the Housing Market?<\/strong><\/h2>\n\n\n\n

Canadians watching the housing market are waiting to see what, if any, impacts this year\u2019s rate increases will have on the real estate market. If you\u2019re in the market, here\u2019s what you need to know:<\/p>\n\n\n\n

1. Previous Tightening Cycles Reduced Market Urgency, But Not Necessarily Product Price Points <\/h3>\n\n\n\n

Zoocasa recently analyzed what happened in the Toronto Region real estate market the last time that interest rates rose in 2017-2018<\/a>. The key findings from this report included that:<\/p>\n\n\n\n