Canada housing market upturn could delay shift to BoC rate cuts

📆 14-5-2023 18:45:00
📰 Reuters

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Signs of recovery in Canada's housing market after a year-long slump, just as higher borrowing costs are expected to slow much of the rest of the economy, could raise inflation and delay a shift by the central bank to interest rate cuts, analysts said.

last month, leaving the benchmark rate at a 15-year high of 4.50% since January.

"The Bank of Canada at the end of the day is probably not going to be too thrilled if the housing market really starts to ramp up," said Robert Kavcic, a senior economist at BMO Capital Markets. "From a shelter cost perspective, you are going to start to see more upward push on inflation in the second half of this year."

In addition, variable-rate borrowers have been sheltered from higher interest rates after lenders temporarily extended the period over which their debt is amortized, keeping their payments the same.

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