3 Things You NEED TO KNOW About the Bank Of Canada Rate Announcement - April 13th, 2022
What? The Bank of Canada increased its overnight rate by 0.50%
So? This was the biggest one-time increase in 22 years, since 2000, in an effort to reign-in high inflation.
And... The Bank is also ending reinvestment and will begin quantitative tightening (QT), effective April 25. Maturing Government of Canada bonds on the Bank’s balance sheet will no longer be replaced and, as a result, the size of the balance sheet will decline over time.
1. Quantitative tightening is another lever that the BoC will use to combat soaring inflation by withdrawing money supply out of the economy
2. CPI inflation in Canada is 5.7% and is expected to average at 6% for the 1st half of 2022 and is expected to moderate to about 2½% in the second half of 2023 and return to the 2% target in 2024
3. Consumers with variable rate mortgages and lines of credit will pay slightly more for their mortgages but they are still paying a lot less than what they would have paid had they been on a fixed rate mortgage.
Call us to see how today's BOC announcement impacts your mortgage.
Keith Baker & Jackie Zerbe