Canada’s central bank has held its key policy rate at 2.25%. So what is the outlook for mortgage interest rates?

A decision to hold was expected from the Bank of Canada. The bank once again made it clear that the future of the global economy largely hinges on the war in the Middle East, stating that “the path for global inflation is highly dependent on how the conflict unfolds.”

The BoC outlined potential incentives for a rate cut or hike. A resumption of economic growth in the second quarter, solid consumer spending and stabilizing housing activity suggest that a rate cut may be unnecessary. Headline inflation remains high but core inflation, which removes the impact of the war-induced oil prices, has remained near its desired 2% value. If core inflation remains stable, it will give the BoC room to cut in the future.

Ultimately, the Bank has decided that uncertainty is too high to take a decisive path forward. The final sentence in the press release highlights the Bank’s commitment to maintaining price stability, suggesting that we won’t see any rate cuts unless there is significant weakening in the economy.

As for mortgage interest rates, it appears that the current interest rate environment will prevail for the foreseeable future, with a major rate hiking or cutting cycle unlikely. Ontario’s homeowners and those seeking a mortgage should plan for the future with this in mind.