Vancouver realtor says holding key rate could provide 'sense of stability' to slumping housing market
Many mortgage-holding homeowners are breathing a sigh of relief with news the Bank of Canada is keeping its key interest rate at 4.5 per cent.
The bank's decision comes after a year filled with increases intended to slow down the economy and decrease record-high inflation levels.
In a news release Wednesday morning, the Bank of Canada said it was able to hold the key rate due to economic growth slowing down and inflation decreasing in January.
However, the Bank of Canada noted the 5.9 per cent inflation rate is still high, and said the key interest rate could later be used to help reach its goal of two per cent.
"I do think there are storm clouds on the horizon," said Vancouver-based economist Jason Clemens. "It's not clear to me at all that we are now in a trend of lowered inflation."
Clemens believes it's far too early to see Wednesday's Bank of Canada announcement as a sign of hope.
"It takes anywhere between 6-12 months for the effects of monetary policy to show up," said Clemens. "The bank only started raising rates a year ago and so the full effects from even the first set of interest rate hikes has not fully made its way to the economy."
One Vancouver-based realtor told CTV News the Bank of Canada decision could impact the slumping housing market.
"I think a pause will really help homebuyers, especially start to feel there's a sense of stability in the marketplace," said Ryan Dash, partner with Vancouver Life Real Estate Group.
He said the flow in available credit can influence prices in the market. However, he believes a lack of supply remains a top issue.
"Inventory in Vancouver is just as big a story as interest rates."
The Bank of Canada said it will continue to assess the economy and inflation, and still expects the inflation rate to cool down to three per cent by the middle of the year. The next announcement is scheduled for April 12.
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