Interpreting recent economic signals in the first quarter of 2019 is challenging. Housing markets in main urban centers are cooling. This is generally interpreted as a good sign and potentially averting a housing bubble. It appears that the new rules on speculation, foreign ownership and increasing mortgage rates have had a positive impact on a heated marketplace. As BDC.ca indicates the cooling will continue, “Research shows it takes between three and five years for changes in central bank interest rates to fully work their way through the economy. When they do, a one percentage point change in interest rates can have a three-to-five percentage point impact on home prices.”
Business Confidence Stabilizes In April
The Canadian economy is in transition. Our partners at NBF Economics remind us, there is a positive outcome. The benefit is that interest rate hikes are not likely in the future as the Bank of Canada Governor Poloz indicates.
“As financial conditions had eased, the Bank believed the current interest rate level to be consistent with its positive economic outlook going forward. If we assumed the Bank’s forecast to be right, Poloz’s view was that the policy rate was more likely to go up than down, though there was “no rush to get back in the saddle in terms of hikes.”