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The rate debate – Is a June or July cut on the horizon?
As progress on the inflation front unfolds, it’s a coin toss as to whether the Bank of Canada or the Fed will be the first to cut rates. The Canadian economy is performing much better than expected. Real gross domestic product (GDP) rose by 0.6% in January, well above the flash estimate of 0.4%, and…
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Enhancing Efficiency of the Housing Finance System to Improve Affordability
CMHC (Canada Housing and Mortgage Corporation) plays a central role in supporting the stability and accessibility of the Canadian housing market, ensuring that Canadians have access to safe, affordable, and sustainable housing options. Its commercial activities primarily involve mortgage insurance and mortgage securitization. CMHC provides a guarantee of timely payment on National Housing Act Mortgage-Backed…
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Parsing the Bank of Canada’s Messaging
February headline inflation came in below expectations at 2.8%. Core inflation, captured by the Bank’s preferred CPI-median and CPI-trim measures, also fell short of expectations, at 3.1% and 3.2% respectively. Some commentators have suggested that the Bank of Canada should declare victory and start cutting rates in April. They argue either that the Bank should…
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A Tale of Two Cities
A cornerstone of the federal housing strategy is to encourage municipalities to change their land use framework and make missing middle and affordable housing developments more accessible. A recent report by Frank Clayton at Metropolitan University examines why housing affordability in Toronto, Ontario’s largest metropolitan area, has deteriorated much more than Ottawa, the province’s second-largest…
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Shifting into Neutral
It seems safe to assume that we have seen the last of interest rate hikes in the policy cycle. Both Governor Macklem and Fed Governor Powell have indicated that rates are sufficiently high. Market watchers are now focusing on when and how quickly the Federal Reserve and the Bank of Canada will begin lowering interest…
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Lowering the First Rung on the Housing Ladder
A recent report by Ontario’s Municipal Property Assessment Corporation (MPAC) highlights the scarcity of homes under $500,000 in Ontario. In 2013, 74% of residential properties had a value below this threshold. Today, just 19% of homes are valued below $500,000. While this situation varies from province to province, it highlights the significant challenges faced by…
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Slow Progress on the Last Mile to 2% Inflation
The final mile on the road to achieving the Bank of Canada’s 2% inflation target will not be an easy one. After witnessing inflation surge to a four-decade high in 2022, most of the subsequent disinflation has been a result of falling oil prices and global supply chain improvements. Despite the Bank signalling a halt…
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