Kolbi Turner

04/29/2026

Bank of Canada Holds Policy Rate Steady

Today, the Bank of Canada once again held the policy rate steady at 2.25%. This is the bottom of the Bank's estimate of the neutral overnight rate, where monetary policy is neither expansionary nor contractionary. With inflation hovering at 2.4% and core inflation falling to 2.0%, the Governing Council sees the current overnight rate as appropriate, as the Bank looks through the inflationary effects of the war in Iran.

"The evolving conflict in the Middle East is causing heightened volatility, and US trade policy continues to reshape global trade patterns. Both are ongoing sources of uncertainty. The Bank’s April outlook assumes tariffs remain unchanged and the global benchmark price of oil declines to US$75 per barrel by mid 2027, still well above pre-war oil prices". According to the BoC, if that happens, inflation should peak around 3% in April and ease back to the 2% target by early next year.

"The Iran war has led to sharply higher energy prices and transportation disruptions, diminishing growth prospects in oil-importing countries and boosting inflation worldwide. In the United States, growth is still expected to be solid over the projection horizon, boosted by AI-related investment and consumption growth. China’s economy is supported by robust exports. In the euro area, higher prices for oil and natural gas will weigh on economic activity."

Bond yields are modestly higher since January, while equity markets, which weakened sharply at the outset of the war, have recovered. Since the start of the war, the US dollar has appreciated against most major currencies.

"The outlook for economic growth in Canada is little changed from the January Monetary Policy Report (MPR) projection. After a contraction in the fourth quarter of 2025, growth is forecast to have resumed in early 2026. Consumer and government spending are supporting economic activity, while tariffs and trade uncertainty are weighing on exports and business investment. Housing activity declined in the fourth quarter and is held back by slow population growth, economic uncertainty and ongoing affordability issues. The labour market is soft, with subdued employment growth over the past year and job losses in sectors targeted by US tariffs. The unemployment rate remains in the 6½% 7% range, reflecting both weak hiring and fewer job seekers."

The Bank’s April forecast projects GDP growth of 1.2% in 2026, rising to 1.6% in 2027 and 1.7% in 2028 as growth in exports and business investment resumes along a lower trajectory. With GDP growing slightly above potential, the current excess supply in the economy is gradually absorbed. While the war in Iran may alter its composition, overall GDP growth is little changed in the updated forecast: Since Canada is a large net exporter of oil, higher oil prices increase national income even as consumers are squeezed by higher gasoline prices.

The Bank's press release goes on to say that "CPI inflation will likely rise further in April to about 3%. Based on the assumption that oil prices will ease, inflation is forecast to come down to the 2% target early next year and remain around 2% over the projection horizon.

Against this backdrop and taking into account the current projection, Governing Council decided to maintain the policy rate at 2.25%. We are closely monitoring the impact of the conflict in the Middle East and the economy's response to US tariffs and trade policy uncertainty. Governing Council is looking through the war’s immediate impact on inflation, but will not let higher energy prices become persistent inflation. As the outlook evolves, we stand ready to respond as needed. The Bank is committed to maintaining Canadians’ confidence in price stability through this period of global upheaval."

WTI crude oil futures jumped more than 5% to above $105 per barrel on Wednesday, amid no signs of a near-term end to the conflict with Iran or the reopening of the Strait of Hormuz. The surge comes as markets weigh the United Arab Emirates' shock exit from OPEC alongside signs that the conflict involving Iran may persist. Reports that Donald Trump is preparing to extend a blockade on Iranian ports have heightened fears of prolonged supply disruptions, particularly through the critical Strait of Hormuz.

Negotiations remain stalled, with both sides entrenched, raising expectations that the standoff could drag on for weeks. Meanwhile, US inventory data showed sharp declines in crude and fuel stockpiles, while exports surged to record highs above 6 million barrels per day, underscoring tightening global supply. Gasoline and refined fuel prices have also spiked, amplifying inflation concerns worldwide as energy markets remain on edge.

The Canadian dollar weakened, and market-driven interest rates rose despite the Bank of Canada's rate hold. The Fed is expected to follow suit this afternoon, maintaining its policy rate at 3.5% to 3.75%.

Bottom Line

The Bank of Canada has shown its willingness to bolster the Canadian economy amid unprecedented trade uncertainty and a record oil price shock. Ottawa, too, has taken actions to reduce the burden of higher prices on Canadians by temporarily eliminating the excise tax on oil. PM Carney is also working to diversify Canadian trade away from the US.

There will continue to be substantial frictions that limit the geographical diversification of trade sought by Ottawa. The US is Canada's only neighbour; hence, there is a lack of alternative markets that equal the US in size and scale, and, before Trump, in shared values on free trade.

In his speech before the press conference today, Governor Tiff Macklem suggested that, "if the United States were to impose significant new trade restrictions on Canada, we may need to cut the policy rate further to support economic growth. Alternatively, if oil prices continue to increase, and particularly if they remain elevated, the risk that higher energy prices become ongoing generalized inflation increases. If this starts to happen, monetary policy will have more work to do—there may be a need for consecutive increases in the policy rate.

It is highly unlikely that the Bank of Canada would tighten monetary policy when the housing market is as depressed as it is today.

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04/29/2026

No Surprise with the BoC holding steady. Comments from our chief Economist.

04/16/2026

How s the Canadian real estate market shaping up in 2026? Here are some comments from our chief economist at Dominion Lending.
Housing Activity Remains Weak in March

The number of home sales recorded over Canadian MLS® Systems was virtually unchanged (-0.1%) on a month-over-month basis in March 2026.

“Home sales activity remained at lower levels in March, as rising global economic uncertainty, along with a mid-month jump in fixed mortgage rates tied to incoming higher inflation, piled on to an already shaky economic start to the year,” said Shaun Cathcart, CREA’s Senior Economist. “2026 is still expected to see a modest amount of upward momentum in sales and a stabilization in prices as some pent-up first-time buyer demand enters the market, but the forecast for the year has had to be revised downward. The timing of higher mortgage rates, along with the perception they may be temporary, could keep would-be buyers away at the most active time of year – April, May, and June – as they wait for rates to come back down.”

Clearly, the War in Iran, along with its unprecedented oil price shock, has spooked households and businesses, weakening overall economic activity, especially housing, which is highly interest-rate sensitive. Interest rates have risen sharply since the war began in late February, and it is uncertain how long higher oil prices will last. The reopening of the Strait of Hormuz is highly tentative, and it will take weeks, if not months, to return oil prices to pre-war levels.

The war's timing couldn't be worse, as it damages the usually strong spring home-selling season.

New Listings

New listings edged down a slight 0.2% on a month-over-month basis in March 2026. Lower monthly sales numbers so far in 2026 could in part be due to the fact new supply is running at the lowest levels since mid-2024.

With new supply and sales both little changed in March, the national sales-to-new listings ratio remained at 47.8%. The long-term average for the national sales-to-new listings ratio is 54.8%, with readings generally between 45% and 65% that are consistent with balanced housing market conditions.

“While the interest rate situation has recently changed, what could be a challenge for a buyer looking for a fixed rate mortgage may also be seen as more choice and less competition for those choosing a variable rate,” said Garry Bhaura, CREA’s 2026-2027 Chair. “Spring tends to be a busier time of year for the housing market, even if it may not be quite as busy as we were expecting not so long ago."

There were 167,524 properties listed for sale on all Canadian MLS® Systems at the end of March 2026, up just 1% from a year earlier and 10.6% below the long-term average for that time of the year. Overall supply has generally been declining since May of last year.

There were five months of inventory on a national basis at the end of March 2026, unchanged from January and February and right in line with the long-term average for the measure. Based on one standard deviation above and below that long-term average, a seller’s market would be below 3.6 months, and a buyer’s market would be above 6.4 months.

Bottom Line

With geopolitical tensions mounting and the tenuous ceasefire in Iran, potential homebuyers have postponed their purchase decisions. While there remains considerable pent-up demand, and home prices in many regions have fallen sharply, especially in Ontario, which was hardest hit by the tariffs last year and the ongoing condo supply glut. These issues are unlikely to be resolved in the near term so that housing market weakness will remain a drag on overall economic activity.

Compounding these concerns is the surge in oil prices. Gasoline prices--a very visible component of consumer spending--have skyrocketed, causing supply disruptions in nitrogen fertilizer, plastics, aluminum and helium. Price pressures will no doubt mount, leading central banks to be concerned about potential stagflation. Next Monday, we will see the CPI data for March. At this point, the Bank of Canada is likely to continue to "look through" the price pressures, hoping the war will end very soon.

03/18/2026

How many Mortgage brokers and Realtors are passing on the news that the BoC left their overnight night? The overnight rate affect variable mortgage, lines of credit or any loan tied to prime rate which currently stands @ 4.45%* Here are a few words from a great lender in Canada First National about this most recent meeting.

The Bank of Canada maintains its interest rate policy heading into spring

First National Financial LP
The Bank of Canada is ushering in the spring by keeping its benchmark interest rate at 2.25%. This determination was widely expected by economists despite some very recent changes in the economic indicators that the Bank uses as part of its deliberations. A summary of the Bank’s observations and rationale follows.

Canadian Economic Performance
GDP in Canada contracted 0.6% in the fourth quarter of 2025
This was weaker than expected at the time of the Bank’s January Monetary Policy Report (MPR), mainly because of a larger-than-expected drawdown in inventories
Domestic demand grew by more than 2% due to strength in consumer and government spending, even as housing markets remained weak
Canada’s labour market remains soft as employment gains in the fourth quarter of 2025 were largely reversed in the first two months of 2026, and the unemployment rate rose to 6.7% in February
Canadian Inflation and Outlook
Inflation, measured by the Consumer Price Index (CPI), “eased further” to 1.8% in February, down from 2.3% in January
CPI inflation excluding changes in indirect taxes as well as core inflation measures have also come down and are all “close” to 2%
Food inflation slowed in February but remains elevated
The sharp increase in global energy prices has led to increases in gasoline prices, and this will push up total inflation in the coming months
Bond Markets, Credit Spreads and F/X
Global bond yields have risen, equity market prices have declined, and credit spreads have widened
The Canada-US dollar exchange rate has remained relatively stable
Global Economic Commentary
Prior to war in the Middle East, the global economy was on pace to grow at around 3%, as expected in the January MPR
Economic growth in the United States has moderated but remains “solid,” driven by consumption and strong AI-related investment
US inflation remains above target and has evolved largely as expected
In the euro area, domestic demand is supporting growth while exports have contracted
China’s economy continues to be boosted by strength in exports, but domestic demand remains weak
War in the Middle East Increases Volatility; Too Early to Assess Impact on Canada
The Bank made special mention of increased volatility in global energy prices and financial markets caused by war in the Middle East, noting that this development has “heightened the risks to the global economy.” The conflict’s breadth and duration, and “hence its economic impacts” are “highly uncertain.” As a result, the Bank said it is too early to assess the impact of the conflict in the Middle East on growth in Canada.

Rationale for Today’s Decision and Outlook
In commenting on its decision to hold its policy rate steady, the BoC made several comments:

Since the outbreak of the conflict in the Middle East, global oil and natural gas prices have risen sharply, and this will boost global inflation in the near-term
In addition to energy supply disruptions, transportation bottlenecks stemming from the effective closure of the Strait of Hormuz could impact the supply of other commodities, such as fertilizer
Financial conditions have tightened from accommodative levels.
Against this overall backdrop, the BoC’s Governing Council decided to maintain the policy rate at 2.25%. With recent data pointing to weaker economic activity and uncertainty elevated, risks to growth look “tilted to the downside.” At the same time, inflation risks have gone up due to higher energy prices. The Bank said it will continue to assess the impact of US tariffs and trade policy uncertainty, and how the Canadian economy is adjusting. It will also monitor the unfolding conflict in the Middle East closely and assess its impact on growth and inflation.

The Bank added that it continues to expect the Canadian economy to “grow modestly” as it adjusts to US tariffs and trade policy uncertainty, but it also acknowledged that “recent data suggest that near-term economic growth will be weaker than anticipated in January.” Looking through the volatility, the Bank also said that recent data suggest ongoing weakness in exports.

Final Comments
The Bank offered that as the outlook evolves, “we stand ready to respond as needed” with a commitment to ensuring that Canadians “continue to have confidence in price stability through this period of global upheaval.”

Next up
The Bank is scheduled to make its next policy interest rate announcement on April 29th. First National’s executive summary will follow. In the meantime, please visit the Resources page of this website for other important insights.

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03/17/2026

Housing Activity Fell Again in Early February--Depressed by Record Winter Storm--Before Picking Up in Late February

Today's release of February housing data by the Canadian Real Estate Association (CREA) showed the housing market slowed further at the start of the month, reflecting the lingering effect of January's snowstorm. Activity picked up in the second half of the month, a positive harbinger of a spring rebound.

The number of home sales recorded over Canadian MLS® Systems fell 1.3% on a month-over-month basis in February 2026, following a 5.8% decline in January.

“February saw a continuation of the quieter levels of activity recorded in January, although there was some indication things were starting to pick up speed toward the end of the month,” said Shaun Cathcart, CREA’s Senior Economist. “2026 is still ultimately expected to be a story about pent-up first-time buyer demand finally seeing a chance to enter the market. They’ve had to wait a long time for mortgage rates to find a bottom, but some will no doubt continue to hold off for a bottom in prices in some Ontario and British Columbia markets.”


New Listings

New listings fell back by 3.9% on a month-over-month basis in February 2026, erasing the jump recorded in January.

With new supply down by more than sales in February, the national sales-to-new listings ratio tightened to 47.6% compared to 46.4% in January. The long-term average for the national sales-to-new listings ratio is 54.8%, with readings roughly between 45% and 65% generally consistent with balanced housing market conditions.

“Housing market activity in February remained slow, particularly in the stretch of Ontario between Windsor and Toronto,” said Valérie Paquin, CREA Chair. “That said, the main event never really gets going until around April, so there’s still time to get ready to buy or sell this year."

There were 151,850 properties listed for sale across all Canadian MLS® Systems at the end of February 2026, up 3.7% from a year earlier but 12.3% below the long-term average for that time of year.

There were five months of inventory on a national basis at the end of February 2026, unchanged from January and right in line with the long-term average for the measure. However, the national average masks wide regional differences, with no province currently at that level and only a handful of local markets close to it. Based on one standard deviation above and below that long-term average, a seller’s market would be below 3.6 months, and a buyer’s market would be above 6.4 months.




Home Prices

The National Composite MLS® Home Price Index (HPI) edged down 0.6% on a month-over-month basis in February, not a small decline but smaller than in January.

The non-seasonally adjusted National Composite MLS® HPI was down 4.8% compared to February 2025.



Bottom Line

The chart below shows that, just as Canada had a record housing rally during the pandemic, it is leading the housing correction. Canadian home prices are down 18% from their peak in the first quarter of 2022, when the Bank of Canada took the overnight rate down to a mere 25 bps. Currently, the policy rate is 2.25%, down from 5.0% at the peak of the tightening cycle. Back then, ultralow interest rates drove home prices to surge, particularly in smaller cities where remote workers fled to take advantage of a lower cost of living.

There is considerable pent-up demand among potential first-time buyers who will likely dip their toes in the market once winter passes. This year, we also see a record volume of refis and renewals, which will increase monthly mortgage payments and dampen household purchasing power. Affordability remains a challenge for first-time buyers, but mortgage rates and prices are considerably lower than a year ago. A reawakening of housing activity is likely as the spring market approaches, even with the war in Iran.

To be sure, the recent oil price shock has boosted market-driven interest rates as inflation fear mounts. Yesterday's release of the CPI data shows that Canada's inflation rate fell sharply before the war began. How much further inflation might rise will depend on the length of the war and the subsequent time it will take to reopen the Strait of Hormuz.

02/17/2026

CPI Inflation in Canada Fell A Tick to 2.3% Y/Y in January on Gasoline Price Decline

The Consumer Price Index (CPI) rose 2.3% on a year-over-year basis in January, following a 2.4% increase in December.

The gasoline price index was the largest contributor to the deceleration in headline inflation, with a larger decline in January than in December. Excluding gasoline, the CPI rose 3.0% in January, matching the December increase.

Indexes with year-over-year movements impacted by the temporary GST/HST break in January 2025 continued to put upward pressure on the year-over-year all-items increase in January 2026. Among the affected indexes, the CPI remained most affected by the acceleration in prices for restaurant meals, and to a lesser extent, by prices for alcoholic beverages, toys, and children's clothing.

The core inflation measures decelerated further in January, with the BoC's two favourite measures easing to their lowest levels in a year (see chart below).

Prices at the pump fell 16.7% year over year in January, after a 13.8% drop in December. The larger year-over-year decline was mainly due to a base-year effect. The index rose 0.5% month over month in January 2026, compared with a 4.0% increase in January 2025, when crude oil prices rose. Additionally, the partial reintroduction of the provincial gas tax in Manitoba in January 2025 is no longer impacting the 12-month movement.

For food purchased from restaurants, prices were higher in January 2026 (+12.3%) than in January 2025, when prices were lower due to the GST/HST break.

Similarly, prices rose on a year-over-year basis for other previously tax-exempt goods in January 2026, including alcoholic beverages purchased from stores (+7.9%), alcoholic beverages served in licensed establishments (+9.0%), toys, games (excluding video games) and hobby supplies (+8.7%) and children's clothing (+6.3%).

Year over year, prices for cellular services decelerated in January (+4.9%) compared with December (+14.6%), reflecting a base-year effect after six consecutive months of upward pressure. On a month-over-month basis, prices declined in January 2026 (-0.8%) after increasing in January 2025 (+8.3%).

Prices for food purchased from stores rose 4.8% year over year in January, following a 5.0% increase in December. The slower price growth was mainly driven by a decline in fresh fruit prices (-3.1%) in January, after a 4.5% increase in December. Amid generally strong or stable harvests in producer regions, the largest contributors to downward pressure on prices were berries, oranges and melons.

Since early 2024, growth in shelter costs has slowed year over year. In January 2026, prices continued to decelerate, rising 1.7%. This is the first time in nearly five years that year-over-year shelter price growth has fallen below 2.0%. Slower growth in rents and mortgage interest costs drove the deceleration.

Rent prices rose at a slower pace year over year in January (+4.3%) than in December (+4.9%). Rent prices decelerated the most in Prince Edward Island (+0.2%) and Saskatchewan (+1.8%).

The mortgage interest cost index rose 1.2% year over year in January, following a 1.7% increase in December. This index has been decelerating since September 2023.

In January, prices rose at a slower pace in nine provinces than in December. Year-over-year price growth accelerated in British Columbia due to a base-year effect, as hotel prices declined on a monthly basis in January 2025 after increasing in December 2024, coinciding with a series of high-profile concerts in Vancouver.

Bottom Line

Although inflation pressures are dissipating, this report alone will not trigger a Bank of Canada rate cut when the Bank meets again on March 18. It is unlikely to move the Bank of Canada from the sidelines as it continues to evaluate how US tariffs are affecting the economy. The data suggest that Americans are paying the bulk of the tariffs.

The Bank of Canada’s preferred measures of core inflation decelerated, with the median gauge edging down to 2.5% from 2.6%, and trim falling to 2.4% from 2.7%.

What the Canadian economy needs is greater clarity on the future of the Canada-Mexico-United States (CUSMA) trade agreement. Reduced uncertainty is the key ingredient required for a rebound in housing activity, particularly in the regions of Ontario and Quebec hardest hit by the tariffs.

The central bank kept its policy rate at 2.25% last month for the second consecutive meeting and has signalled an aversion to juicing demand at this time. In a speech earlier this month, Governor Tiff Macklem warned that cutting interest rates amid a supply-side shock could stoke inflation.

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
[email protected]

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02/17/2026

Inflation drops just a bit.

01/28/2026

No Surprise that the BoC held the overnight lending rate. Our chief economist Sherry Copper has her say.
Bank of Canada Holds Policy Rate Steady

Today, the Bank of Canada once again held the policy rate steady at 2.25%. This is the bottom of the Bank's estimate of the neutral overnight rate, where monetary policy is neither expansionary nor contractionary. With inflation hovering just above 2% and core inflation falling to 2.5%, the Governing Council sees the current overnight rate as appropriate, "conditional on the economy evolving broadly in line with the outlook published today. Inflation was 2.1% in 2025, and the Bank expects inflation to stay close to the 2% target over the projection period, with trade-related cost pressures offset by excess supply.”

According to the press release, "Economic growth is projected to be modest in the near term as population growth slows and Canada adjusts to US protectionism. In the projection, consumer spending holds up, and business investment gradually strengthens, with fiscal policy providing some support. The Bank projects growth of 1.1% in 2026 and 1.5% in 2027, broadly in line with the October projection. A key source of uncertainty is the upcoming review of the Canada-US-Mexico Agreement."

In the United States, economic growth is supported by strong consumption and a surge in AI investment. The Fed stood pat today, but is expected to cut rates three times in the second half of this year. The US Federal Reserve is likely to cut its policy rate by 25 bps to 3.5%-3.75% as President Trump lobbies Chair Jay Powell for more dramatic rate cuts.

Data released yesterday showed that US consumer confidence plummeted in January to the lowest level in 12 years on more pessimistic views from Americans worried about the nation’s economy, inflation and a weakening labour market.

The Conference Board gauge decreased to 84.5 from an upwardly revised 94.2 last month, data released Tuesday showed. The figure was the lowest since May 2014 and fell short of all estimates in a Bloomberg survey of economists.

Bottom Line

The Bank of Canada has shown its willingness to bolster the Canadian economy amid unprecedented trade uncertainty. At the same time, Canada is working hard to establish alternative trade partners. Even the vast Chinese market cannot replace the US in terms of proximity and cost-effectiveness, given the high transport costs. China has stepped up its purchases of Canadian oil to record levels. There is no single market the size of the US market to replace exports of steel and aluminum.

“Employment weakened in the first half of 2025 as sectors hit hard by U.S. tariffs cut production and jobs,” Macklem said. “In recent months, overall employment has risen, led by hiring in services like health care, and slowing population growth is reducing the number of new entrants into the labour market.”

US tariffs have had a significant negative impact on Canadian exports. While the push for trade diversification is welcome, export growth is expected to be modest over the next two years.

“This restructuring, including more diversified trade and a more integrated internal market, will support some recovery in our productive capacity,” Macklem said. “But it will take some time.”

As outlined in its Monetary Policy Report (MPR), the top risk to the outlook is the CUSMA review. The bank highlights that Canada currently has an effective US tariff rate of 5.8%, thanks to the exemptions under the North American trade pact. It warned that an unfavourable outcome to negotiations could make Canadian exports less competitive.

“Faced with weaker demand, exporters would reduce production, investment and hiring,” the report said. “This would spill over into the broader economy, weighing on sectors such as services and putting Canadian GDP on a lower path.”

“Government spending on infrastructure is projected to rise, mainly reflecting commitments in provincial budgets,” the report said. “Additional federal capital transfers will also bolster infrastructure investment.”

In this environment, market-driven interest rates have risen. The 5-year bond yield is once again attempting to break through 3%. The 2-year bond at 2.67% is well above the overnight rate, and the Canadian dollar is rising. Lenders have recently increased fixed mortgage rates, which will be more popular if people generally expect rates to rise.

The key to the outlook is the continuation of CUSMA. We will likely suffer several more months of uncertainty before we know the fate of the trade agreement. In the meantime, PM Carney will continue to encourage trade deals in non-US countries.

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
[email protected]

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12/30/2025

MEETING SCHEDULE
WHEN IS THE NEXT BOC MEETING?

The Bank of Canada meets eight times per year and makes announcements about rates. These meetings can set the tone for our real estate markets and borrowing costs on things like lines of credit, variable rate mortgages and home equity lines of credit to name a few. Happy 2026 wishing everyone a successful and happy New Year

• Wednesday, January 28
• Wednesday, March 18
• Wednesday, April 29
• Wednesday, June 10
• Wednesday, July 15
• Wednesday, September 2
• Wednesday, October 28
• Wednesday, December 9

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