Markets are pricing in 87-per-cent odds of a 25-basis-point cut as of Thursday morning.PATRICK DOYLE/The Canadian Press
The latest inflation report from Statistics Canada was hotter than expected, but that has had little effect on expectations that the Bank of Canada will cut interest rates when it convenes next week.
The Consumer Price Index rose by 2.4 per cent year-over-year in September, up from August’s 1.9-per-cent reading and 0.2 percentage points more than analysts expected for the month.
Despite that, markets are pricing in 87-per-cent odds of a 25-basis-point cut as of Thursday morning. (There are 100 basis points in a single percentage point.) The Bank of Canada will make an interest-rate decision on Oct. 29, and such a cut would bring its headline rate down to 2.25 per cent and provide further relief to homeowners with variable-rate mortgages.
Shannon Terrell, a financial expert with NerdWallet, said Canada’s stuttering job market and high unemployment levels are partly why higher inflation isn’t enough for the Bank of Canada to hold rates.
“Canadian businesses need an unobstructed on-ramp to bolster confidence, and a brake-pumping rate hold could stall the engine,” Ms. Terrell said in an e-mail.
She added that a rate cut in October was unlikely to spur much more action in the real estate market.
One major change this week from Ratehub.ca’s analysis of the lowest available mortgage rates is that the three-year fixed mortgage is no longer the lowest available fixed rate. The lowest advertised three-year rate went from 3.69 per cent last week to 3.94 per cent this week.
The five-year fixed rate is now the cheapest available fixed mortgage rate at 3.79 per cent, but five-year variable rates are already slightly cheaper at 3.7 per cent, and are poised to get another discount this month if the BoC indeed cuts rates.
Mortgage rates are sourced by Ratehub.ca. For a comprehensive list of today’s mortgage rates for each term/type, visit ratehub.ca/best-mortgage-rates.
Ratehub.ca is a mortgage-rate comparison marketplace and mortgage brokerage. It helps millions of Canadians compare and obtain the best mortgage rates, credit cards, insurance, deposits and loan products.
Rates shown are the lowest available for each term/type and category (insured versus uninsured) as of market close on Thursday.
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