Canada’s economic spotlight is firmly on October 28th, when the Bank of Canada (BoC) will announce its next Key Rate decision. The central question for homeowners and buyers is whether the Bank will raise rates or keep them unchanged.

The Key Rate currently stands at 2.25%. Inflation, however, has remained around 3% in recent months, prompting renewed attention to the possibility of a rate hike. The BoC has noted that higher gasoline prices have been a significant contributor, while inflation excluding gasoline has been closer to 2%.

The U.S. Federal Reserve recently raised its Benchmark Interest Rate by a quarter of a percentage point, bringing its target range to 3.75 to 4%. Following the move, markets began chattering about another quarter-point increase as early as October, but comments from influential New York Fed President John Williams have reduced those expectations.

“With the policy action we took at our September meeting, there is no need for urgency, and we have time to gather more information,” said Williams, triggering an adjustment in expectations. And if global developments cause oil prices to moderate, the case for another U.S. rate hike would weaken further.

Here at home, in a good news kinda way, BoC Governor Tiff Macklem has emphasized that Canada will make its monetary-policy decisions based on domestic economic conditions, rather than simply following the Federal Reserve. “We can run a monetary policy in Canada that is geared to the situation in Canada, and that’s what we’re going to keep doing,” Macklem said.

The BoC is also watching energy prices – as they could swing up or down and that of course affects the entire picture. Meanwhile, the government continues to diversify its trade relationships as uncertainty persists in its economic relationship with the United States. Canada is also deepening economic and security cooperation with the European Union through a proposed new “associate member” relationship. These broader developments will continue to shape the economic outlook.

October offers some of the most beautiful scenery of the year. The colours are spectacular, the air is crisp, and the housing market has plenty of colour of its own. Wondering what current market conditions mean for your next move? Give me a call. I'm always here when you or those you know want to talk real estate.