House market is crushing! House market is crushing! Is that you are waiting for?
Let’s take a look two news first.
On Mar 2, the Bank of Canada announced a widely-expected 25 basis point hike, bringing it’s lending rate to half a percent up from the floor of 0.25%, it held for much of covid 19 pandemic. This is the first time the bank has hiked it’s interest rate, since Oct 2018
Another information is REBGV(Real Estate Board of Greater Vancouver) released Feb data. Residential home sales 3424, decreased 8.1% from Feb 2021, but 49.8% increased from Jan 2022. 6742 total currently listed, 19.3% decrease from Feb 2021, 19.1% increase from Jan 2022.
The bank of canada is trying to take some steam out of economy and tamp down on the surging inflation. But I want to warn you the high prices will remain a regular part of life for months to come
In a statement accompanying the decision, the bank of canada think the war in Ukraine is a major new source of uncertainty that is driving prices higher on oil and other commodities. This will add to inflation around the world. Financial market volatility has increased.
The bank had implied it would use higher interest rate to tamp down on surging inflation, which hit a more than 30 year high of 5.1 per cent in January, too much above the perfect target 2 percent.
But how much more can they increase, it’s hard to say.
But in January, The bank of canada said in a monetary policy report accompanying it’s January rate announcement that while it expected inflation to remain around the 5 percent mark through the first half of the year. It forecast pressure would ease and annual inflation could drop to around 3 percent by the end of 2022.
Now, The bank is cautioning that fresh pressures, including the war in Ukraine, are like to make inflation worse before it gets better.
All told, inflation is now expected to be higher in the near term than projected in January. It wrote.