‘The perfect trifecta for buyers': Bank of Canada holds key rate at 2.75%
A rate announcement to come Tuesday morning is expected to declare the Bank of Canada will keep its key rate at 2.75% amid Trump's erratic global trade war.
The Bank of Canada has announced it's leaving its benchmark interest rate unchanged at 2.75 per cent.
The decision was largely based on economic uncertainty created by U.S. President Donald Trump's global trade war.
'Uncertainty remains high. The Canadian economy is softer, but not sharply weaker, and we've seen some firmness in recent inflation data,' said Tiff Macklem, BoC governor.
Macklem says there was some unexpected firmness in recent inflation data, but the decision was made to hold the rate steady
'Against this backdrop, we decided to hold the policy rate unchanged as we continue to gain more information on U.S. trade policy and its impacts,' said Macklem.
The central bank says it will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures from higher costs.
'We are certainly starting to see interest rates bite for consumers, where we see increases in the number of consumers unable to make their payments, skipping payments on credit cards and car loans, as well as getting into difficulty in terms of bankruptcy,' said David MacDonald, a Senior Economist for the Canadian Centre of Policy Alternatives.Economist Colin Mang says he believes the BoC's decision to take a wait-and-see approach was the right move.'There's a lot of concern around many of the goods that we trade, particularly around grocery prices with retaliatory tariffs. Right now, the bank is just not in a very good situation to forecast where the Canadian economy is going to go over the next six months,' said Mang.
Impact to Lower Mainland real estate market
The economic uncertainty is also cooling the Lower Mainland's once red-hot housing market. Sales are the slowest they've been in a decade.
'Once or twice a decade, we get an opportunity like this, as a homebuyer, to go out there, look at a whole host of different properties, take your time in making an astute, thoughtful decision, and not be rushed, and also negotiate your terms,' said Adil Dinani, a spokesperson for Royal LePage.
Although rates did not dip Wednesday, many mortgage brokers say now is the time to make a move.
'We're averaging a low four per cent for fixed and variable interest rates right now. So it is historically average interest rates at this time,' said Vik Sahi, a broker with Mortgages 4 You.
'You're seeing rates dip, you're seeing prices soften, and you're seeing your supply and your inventory increase. Meaning all three of those together is the perfect trifecta for buyers.'
Sahi says uncertainty brings opportunity.
'There's still a lot of opportunity to make moves and refinance if you had a higher rate from 2023 or 2024, there's a lot of strategies that we could place that are going to save people a lot of money, even in this market of uncertainty,' said Sahi.Economists widely expect there to be at least one more rate cut by the end of the year.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CTV News
18 minutes ago
- CTV News
Trump and Musk to speak Friday after alliance descends into public feud, Politico reports
A war of words is beginning to emerge between U.S. President Trump and Elon Musk following the billionaire's White House exit. Joy Malbon has the details. WASHINGTON -- White House aides scheduled a call between Donald Trump and Elon Musk for Friday, Politico reported, after a huge public spat that saw threats fly over government contracts and ended with the world's richest man suggesting the U.S. president should be impeached. The reported call could ease the feuding after an extraordinary day of hostilities - largely conducted over social media - that marked a stark end to a close alliance. Shares in Musk's Tesla closed down over 14 per cent on Thursday, losing about US$150 billion in market value in the largest single-day decline in value in its history. In pre-market European trading on Friday they pared some of those losses, rising 5% after the Politico report that the two men were scheduled to speak. Musk had bankrolled a large part of Trump's presidential campaign and was then brought as one of the president's most visible advisers, heading up a sweeping and controversial effort to downsize the federal workforce and slash spending. The verbal punches erupted on Thursday after Trump criticized Musk in the Oval Office and the pair then traded barbs on their social media platforms: Trump's Truth Social and Musk's X. The falling-out had begun brewing days ago when Musk, who left his role as head of the Department of Government Efficiency a week ago, denounced Trump's sweeping tax-cut and spending bill. The president initially stayed quiet while Musk campaigned to torpedo the bill, saying it would add too much to the nation's $36.2 trillion in debt. Trump broke his silence on Thursday, telling reporters he was 'very disappointed' in Musk. 'Look, Elon and I had a great relationship. I don't know if we will anymore,' Trump said. As Trump spoke, Musk responded on X. 'Without me, Trump would have lost the election,' wrote Musk, who spent nearly $300 million backing Trump and other Republicans in last year's election. In another post, Musk asserted that Trump's signature import tariffs would push the U.S. into a recession later this year. 'The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon's Governmental Subsidies and Contracts,' Trump posted. Minutes after the closing bell, Musk replied, 'Yes,' to a post on X saying Trump should be impeached, something that would be highly unlikely given Trump's Republicans hold majorities in both chambers of Congress. Musk's businesses also include rocket company and government contractor SpaceX and its satellite unit Starlink. Musk, whose space business plays a critical role in the U.S. government's space program, said that as a result of Trump's threats he would begin decommissioning SpaceX's Dragon spacecraft. Dragon is the only U.S. spacecraft capable of sending astronauts to the International Space Station. Late on Thursday, Musk backed off the threat. In another sign of a possible detente to come, Musk subsequently wrote: 'You're not wrong,' in response to billionaire investor Bill Ackman saying Trump and Musk should make peace. Punching back Trump and Musk are both political fighters with a penchant for using social media to attack their perceived enemies, and many observers had predicted a falling-out. Musk hit at the heart of Trump's agenda earlier this week when he targeted what Trump has named his 'big, beautiful bill,' calling it a 'disgusting abomination' that would deepen the federal deficit. His attacks amplified a rift within the Republican Party that could threaten the bill's prospects in the Senate. Nonpartisan analysts say Trump's bill could add $2.4 trillion to $5 trillion to the nation's $36.2 trillion in debt. A prolonged feud between the pair could make it harder for Republicans to keep control of Congress in next year's midterm elections if it leads to a loss of Musk's campaign spending or erodes support for Trump in Silicon Valley. 'Elon really was a significant portion of the ground game this last cycle,' said a Republican strategist with ties to Musk and the Trump administration who spoke to Reuters on condition of anonymity. 'If he sits out the midterms, that worries me.' On Tuesday, Musk posted that 'in November next year, we fire all politicians who betrayed the American people.' Musk had already said he planned to curtail his political spending in the future. Musk's increasing focus on politics provoked widespread protests at Tesla sites, driving down sales while investors fretted that Musk's attention was too divided. By Nandita Bose and Andrea Shalal, Reuters Additional reporting by Jeff Mason, Joey Roulette and Jarrett Renshaw; Writing by Costas Pitas, Joseph Ax and Charlie Devereux; Editing by Don Durfee, Michael Perry and Frances Kerry
CTV News
18 minutes ago
- CTV News
Speech from OPEC head to kick off Global Energy Show in Calgary
OPEC Secretary-General Haitham al-Ghais talks during the ADIPEC, Oil and Energy exhibition and conference in Abu Dhabi, United Arab Emirates, Monday Oct. 2, 2023. Al-Ghais is to deliver a keynote address at the Global Energy Show in Calgary on June 10. (AP Photo/Kamran Jebreili) CALGARY — More than 30,000 people from 100 countries are expected to descend on the white-collar heart of Canada's oilpatch next week for the Global Energy Show, which is to kick off with a keynote address from the head of the Organization of the Petroleum Exporting Countries. OPEC secretary-general Haitham al-Ghais is set to deliver remarks on Tuesday morning, as recent output increases from his group's members and other producers have put pressure on global crude prices. Among the other speakers are 20 chief executives from major Canadian and international energy companies and several political leaders, including Alberta Premier Danielle Smith. Energy show organizers say Calgary is expecting a 30 per cent increase in hotel bookings for the conference and trade show, and that exhibition space has been increased by one fifth year-over year. Nick Samain, senior vice-president at DMG Events, said as of two weeks before the event, pre-registrations were 78 per cent higher than last year. He says the show is seeing a big turnaround since the oil bust of 2015 and the COVID-19 pandemic. 'There's a sense of optimism that the show really hasn't had in a long time,' Samain said in an interview. 'Operationally, we've been going crazy to make sure we've got enough room for everybody.' The exhibition hall in the newly refurbished BMO Centre on the Calgary Stampede grounds is to feature a record 11 country pavilions and 500 company booths. The event was called the Global Petroleum Show until 2020, when it was rebranded to highlight the growing number of non-oil-and-gas participants in the energy space, such as nuclear and renewables firms. Samain said at the trade show, oil and gas makes up about 70 per cent of exhibitors, with other forms of energy making up the rest. The conference comes as U.S. President Donald Trump's tariff war throws global trade into disarray, raising the prospect of a global downturn that could dampen energy demand. The trade strife has driven calls for Canada to diversify its export markets for its energy products beyond its biggest customer, the United States, and remove some of the logjams that have prevented infrastructure from being built over the past several years. Prime Minister Mark Carney has promised to speed up and simplify the regulatory process for projects deemed in the national interest. Samain said the show is an opportunity for people to hash out competing views about Canada's energy future. 'We're just big proponents of people meeting face to face,' he said. 'We find when people get together at an event like this, it really does (give) the opportunity for people maybe to see a different perspective.' A week after the Global Energy Show, another major event drawing dignitaries from abroad is to take place in a popular recreation area in the Rocky Mountains an hour west of Calgary. Canada is to host leaders from the United States, France, Germany, Japan, the United Kingdom, Italy and the European Union at the G7 summit from June 15 to 17 in Kananaskis. This report by The Canadian Press was first published June 6, 2025. Lauren Krugel, The Canadian Press
Globe and Mail
20 minutes ago
- Globe and Mail
Algonquin Power is stirring. Is the rebound for real?
Step one in Algonquin Power & Utilities Corp.'s AQN-T turnaround: Shed renewable assets. Step two: Emphasize growth potential as a pure play utility. Step three: Deliver on potential. With step two in the bag after the company released a fresh outlook this week, which included better-than-expected profit growth through 2027, the share price rallied 16 per cent on Tuesday. Even after losing some momentum as the week wore on, the stock is still up about 26 per cent this year, as of Thursday's close on the Toronto Stock Exchange. But the strong gain, which broke four years of crushing downward momentum, puts a lot of pressure on step three – the delivering part. If you've lost track of Algonquin, you're probably not alone. It used to be a go-to stock for investors looking for a winning combination of renewable power, stable utility assets and a steadily rising dividend. A series of missteps related to the company's rapid expansion and bloated debt sent the share price plummeting. After it slashed its dividend – twice – the share price descended to an 11-year low in January. There was some conjecture that Algonquin would face yet another ignominy: getting tossed from the S&P/TSX 60 index of blue-chip companies for being too withered. Now, after selling most of its renewable energy assets, Algonquin is emerging with a fresh determination to become more profitable and efficient under new chief executive Rod West. To underscore the point, Mr. West referred to Algonquin as a 'pure-play' utility 10 times in a conference call with analysts this week, drumming home the idea that the company is now focused on regulated electricity, natural gas and water distribution. No wonder. Utilities are hot stuff right now, given rising energy needs as power-hungry data centres spring up in North America catering to demands for artificial intelligence. Economic concerns related to rising tariffs adds to their allure. In Canada, the utilities sector trails only materials – largely gold producers – and consumer staples so far this year. The U.S. utilities sector has outperformed the S&P 500, and the tech sector, by more than four percentage points this year. And in terms of valuations, standout Hydro One Ltd. H-T commands a higher price-to-earnings ratio than Google parent Alphabet Inc. Algonquin would like some of this love. Mr. West – who became CEO three months ago after leaving his position as group president of utility operations at New Orleans-based Entergy Corp. – believes that Algonquin can become a 'premium' utility. From investing to real estate, here's how you can Trump-proof your wallet By his definition, that means operating in attractive regulatory jurisdictions, gaining investor confidence with consistent growth and building financial strength with a solid investment-grade credit rating. He has some work to do: 'To become premium, we got to get to good,' Mr. West said on the conference call. But his upbeat forecasts were what likely inspired investors to jump on this turnaround opportunity while it's still in its formative stages. Algonquin plans to spend US$2.5-billion on replacing aging assets and making investments in new ones. These capital expenditures should increase the utility's rate base – assets that generate income – to US$9.1-billion by the end of 2027, or growth of about 5 per cent a year. It plans to cut its operating expenses to a target of 31 to 33 per cent of revenues, which is in line with peers. This, combined with successful electricity rate hikes, should help Algonquin maintain its investment grade credit rating, drive greater cash flow and improve profitability. Brian Chin, Algonquin's chief financial officer, expects profit should rise to a range between 42 and 46 US cents per share by the end of 2027, up from an estimated 30 to 32 US cents per share this year. That implies profit growth of about 42 per cent in just two years, and leads to one more benefit: Higher earnings will lower the dividend payout ratio (the share of profits distributed as dividends) below 70 per cent, from well above 100 per cent currently. That should restore confidence in the quarterly distribution. A turnaround opportunity in the normally staid utilities sector is undoubtedly attractive. If Mr. West delivers on his targets, investors who buy in to Algonquin's potential will be rewarded with a stock that looks cheap next to bigger, sturdier players such as Emera Inc., Fortis Inc. and Hydro One. But with Algonquin's share price well ahead of its peers this year, the turnaround comes with a risk: Much of it is already priced in.
