
While inflation has come down significantly in the past year, the economy seems somewhat impervious to the Bank's efforts to slow it down. The labour market continues to add jobs at a robust pace, consumer spending was brisk during the first quarter and the housing market remains unexpectedly strong. Although the impact of rate increases can take time to be felt, we should be seeing some signs of a slowing economy emerge relatively soon. However, the likelihood of an impending recession and a related fall in interest rates now seem to fading, meaning homebuyers and homeowners may need to wait until next year for any mortgage relief. Indeed, 5-year bond yields are now near 4 per cent for the first time since 2007 which has driven 5-year fixed mortgage rates to their highest point this year. The Bank's statement suggests it may be on pause at 5 per cent, though further rate increases could be on the horizon if the economy continues to out-perform expectations.
Source - BCREA