Bank of Canada Holds Interest Rates In April (Projects Stronger Growth & Lower Inflation In 2023!)

Bank of Canada Holds Interest Rates In April (Projects Stronger Growth & Lower Inflation In 2023!)


So much has gone down in just a month since the last rate decision! It really goes to show how unpredictable things can be these days.

We’ve seen chaos in the banking system across the world and it’s even hitting home to us here in Canada, OPEC surprised everyone by cutting supply, and the GDP and jobs numbers were way stronger than anyone predicted. On the flip side, CPI and PPI were better than expected. It seems

Forces tugging in different directions which makes it hard for the BoC, but according to a survey of economists by Reuters, they all think the decision will be to hold steady and they were right. We expected more tough talk which we got, and we also expected more talk about their wait and see approach which we also got.

Keep reading to get a summary of the BoC April rate decision meeting and what this means for Toronto real estate!

BoC Forecasts

The BoC’s main job is to keep inflation in check, and it seems like they’re making good progress. Inflation’s expected to be around 5.2% in Q1 2023, which is actually a bit lower than what they predicted at 5.4%. 

The latest Business Outlook Survey lines up with the BoC’s thinking that the economy will slow down in the middle of 2023. 

And OPEC’s cutting supply means they think there’s enough signs of a recession in the market that will slow down demand so that’s why they’re taking supply down to defend oil prices.

The Canadian economy is outperforming initial expectations, prompting the Bank of Canada to delay their plans for slowdown. The BoC foresees a gradual but steady growth for the economy in 2023 and 2024, which is expected to accelerate to 2.5% by 2025.

Regarding inflation, the BoC predicts that the CPI will decline rapidly this quarter to 3%, surpassing their previous forecasts. However, they anticipate the CPI will return to its target rate of 2% by the end of 2024.

Canada Bank Forecasts

Our big banks all pretty much agree that the BoC is done with rate hikes, but when the BoC might cut rates is still up in the air and the banks have actually pushed back when rate cuts will happen from end of this year to Q1 of next year and probably the biggest reason for this is because the job market is still super tight.  

What's Happening In Toronto Real Estate

But honestly, since the next move for rates is probably down and not up, the latest on rates has been positive for real estate. 

Ever since the BoC said they’ll pause rate hikes last month, bond yields started to come down and lower fixed rates. So that’s why the market has been picking up quickly in March – there’s more buying confidence and slightly lower rates make it possible for prices to come up.

Listings are still way down from what we’d normally see, so the competition out there is feeling a lot like it did back in early 2022. The latest data from TRREB for March confirms this – the sales to new listings ratio is hitting close to those same levels again. 

But here’s the thing: even though we’re seeing offer dates and multiple bids again, buyers are actually being more careful this time around. They’re putting in conditions, making reasonable offers, and basically being a bit more cautious. So while prices are going up, they’re not shooting up quite as fast as they were back in early 2022.

Toronto Real Estate: A Look Ahead

Looking ahead, fundamentals are improving – whether you like it or not. rates are probably going down instead of up the next time they change, rents are still going strong, and immigration targets are set pretty high.

And yes, houses in Toronto can cash flow and we’re expecting a lot more room for growth in the future. Our city’s working on making it easier to increase density to create more housing supply for our growing population and that means more rental income potential for you as an investor. 

We don’t know when exactly these new policies will take effect but it’s probably sooner than later, and we’re expecting it to be ready by Spring of next year (2024).

How We Can Help

So if you’re looking to get into real estate investing in Toronto again, we’re happy to update you on what’s happening and what the best opportunities for you might be. Just reach out to us by heading to the link in the description below!

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We’d be happy to learn more about your situation and help you find the best investment opportunities for you.