Canadian inflation, as measured by the Consumer Price Index (CPI), registered only 1.4 per cent in the twelve months to January. That was a significant drop from 2 per cent in December due to a 7 per cent decline in energy costs. Excluding the impact of falling gasoline prices, consumer prices were up 2.1 per cent. The Bank of Canada's three measures of trend inflation were unchanged for a third straight month, averaging 1.9 per cent. In BC, provincial consumer price inflation was 2.4 per cent in the 12 months to January.
Given stable inflation and what looks to be weak first quarter economic growth in Canada, the Bank of Canada is unlikely to change course any time soon. Those expectations are being reflected in the steep drop in 5-year government bond yields, but not yet in mortgage rates offered by most lenders, which have only come down modestly. A further fall in 5-year mortgage rates may be on the horizon as lenders compete for market share in the upcoming spring market, which would provide some degree of relief from the overly stringent stress test.
Copyright British Columbia Real Estate Association. Reprinted with permission.
Post Your Comment: