Today, December 6th, the Bank of Canada has kept its target for the overnight rate at 5% for the third time in a row. This means the prime lending rate will remain at 7.2% heading into 2024.
Earlier this year, interest rates increased three times due to stronger-than-expected economic growth. The Bank’s efforts seem to be making a difference. This fall, inflation dropped to 3.1%, just slightly above the Bank’s target range. This has led to speculation that rate hikes are behind us, although the Bank has stated they remain open to raising rates in the future if necessary.
The housing market has slowed in the last few months, causing homes to stay on the market a little longer. Affordability remains a concern for first-time buyers, as living costs and utilities continue to impact homeownership. Stay tuned for the first 2024 Bank of Canada interest rate update on January 24th.