Bank of Canada Governor keeping a close eye on inflation

If you’ve been following our Mortgage 101 podcast, you’ve heard us discuss how mortgage rates, the Bank of Canada and inflation can affect your monthly mortgage payment.

Bank of Canada Governor Tiff Macklem spoke to a packed Halifax Convention Centre on September 21, with many listening for hints about the Bank’s next interest rate decision.

Trade tensions and high energy prices impacting the Canadian economy

Earlier this month, the Bank of Canada decided to hold rates at 2.25 per cent. Holding has been the choice of the Bank for almost a year now as the Canadian economy continues to deal with a fractured trading relationship with the United States, an ongoing war in the Middle East and soaring gasoline prices.

During his speech to a Halifax Partnership luncheon, Macklem said there is no doubt the uncertainty caused by trade tensions with the U.S. is having an impact on our economy.

The Governor did say, however, that new tariffs announced by the U.S. would affect about five per cent of businesses in Canada and he believes programs announced by the federal government would help mitigate some of the damage.

Macklem also said it isn’t likely Canada and the U.S. will return to the trading relationship we enjoyed in the past. That echoes what Prime Minister Mark Carney has been saying almost from the outset of the trade dispute.

Energy prices a concern to the Bank of Canada

Macklem spent a good portion of his speech discussing the ongoing war in Iran and the impact the hostilities are having on energy prices.

He told the assembled business leaders that fuel prices, both gasoline and diesel, have increased by more than the Bank would have expected, given the impact on refineries around the world.

So, what does all of this mean for interest rates?

Macklem wasn’t giving anything away.

He didn’t offer any clear indication, or even a small hint, about where rates could go in October. He did say the Bank is watching events in Canada and abroad very closely and can and will react to inflationary pressures if necessary.

The Bank of Canada will release its next interest rate decision on October 28.

Rate worries got you down?

One option is to connect with an independent mortgage broker now, get a pre-approval and find out what rate options are available to you. A little peace of mind in uncertain times can go a long way.

If you have questions about pre-approvals or your mortgage, get in touch with us at the Clinton Wilkins Mortgage Team. Give us a call at (902) 482-2770 or contact us here.