The Bank of Canada's governing council indicated in deliberations from the July 24 meeting that it was less worried about home prices spiking as the benchmark interest rate falls.
It was a big week for the Bank of Canada as it cut its benchmark interest rate by a quarter of a percentage point on Wednesday – Jul 28, 2024
Deliberations from the July 24 meeting, where the central bank delivered its second consecutive quarter-point rate cut, were published on Wednesday. The Bank of Canada’s top monetary policymakers discussed risks to the inflation outlook and the broader Canadian economy, the minutes show, including the pace of immigration, wage pressures and the housing market.as it edged towards a lower policy rate, fearing sudden cuts to borrowing costs could drive home prices higher and risk progress made to date in taming inflation.
The governors also noted that if housing affordability challenges continue to box renters out of the ownership market, Canadians might face more “upward pressure on rents.” As for borrowing costs, the governing council indicated there was a “clear consensus” that if inflation continued current trends back to the two per cent target, “it would be appropriate to lower the policy rate further.”
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