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In April, inflation increased for the first time in 10 months to 4.4 per cent bringing the prime mortgage rate up to 6.95%
The bank still expects inflation to decline to 3 per cent by this summer, but concerns remain that inflation could get stuck above the 2 per cent target.
“Goods price inflation increased, despite lower energy costs,” reads the statement. “Services price inflation remained elevated, reflecting strong demand and a tight labour market.”
Experts say that the Bank of Canada’s decision to hike rates on Wednesday will put additional pressure on Canada’s already tight rental market.
While the BoC isn’t responsible for sky-high rents, these interest rate hikes will make housing affordability more challenging.
Today’s rate hike will have a psychological effect that will keep homebuyers on the sidelines as they wait for rates to come down – meaning more people will now have to compete for a rental unit.
