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Will the Bank of Canada Cut Rates in June? Here's What You Need to Know (besides June 5th being my Bday)

Before we dive in, let's get one thing straight: predicting interest rate changes is a bit like predicting the weather—everyone has an opinion, but nobody packs an umbrella just in case! ☔️

Is the Bank of Canada Ready to Cut Rates Again? 🏦🍁

With inflation cooling down significantly, there's growing anticipation and desire for lower interest rates. Some of Canada’s most hawkish economists are now suggesting that unless the Bank of Canada (BOC) cuts rates in June, we could be heading into a recession. So, what's the scoop?

Cooling Inflation Signals Potential Rate Cuts 📉

Economists and market watchers are getting increasingly confident about potential BOC interest rate cuts after a soft inflation report. According to Statistics Canada, the annual inflation rate eased to 2.7% in April. Grocery prices, which had been rising steadily, have started to cool off, dropping from 1.9% to 1.4% annually. Meat, non-alcoholic beverages, and bakery products are leading the way in price declines.

But Not All Prices Are Dropping... 🚗💸

While household furnishings and clothing saw year-over-year price declines, gas prices rose 7.9% month-to-month due to higher global oil prices, seasonal blend changes, and a federal carbon levy hike. Plus, rising rents and mortgage renewals are still driving shelter inflation, especially in Alberta, where renters saw a whopping 16.2% year-over-year increase!

What Are the Experts Saying? 🧐

Senior economists like Desjardins' Randall Bartlett highlight the broad-based deceleration in inflation, despite persistent pressures in shelter and gas prices. BMO’s Doug Porter notes that April's report marks the fourth consecutive tame inflation reading, which might just pave the way for a June rate cut by the BOC. However, TD Bank’s Leslie Preston suggests that a July cut might be more likely.

Condo Rents Are Coming Down—For Now 🏢📉

In the Greater Toronto and Hamilton Area (GTHA), the condo rental market has seen the largest six-month decrease in rent prices in 15 years. Urbanation reports a 7.4% decline in average condo rents from the peak rates of late 2023. This temporary relief is thanks to an influx of newly completed condos entering the rental market. But don’t celebrate too soon—this reprieve might be short-lived as ongoing construction continues to fall short of demand.

London’s Real Estate Market is Booming 🚀🏡 #myhometown

Contrary to the trends in Ontario, London’s real estate market is seeing a significant increase in housing starts. The Canada Mortgage and Housing Corporation (CMHC) reports that London recorded 416 housing starts in April, almost double the number from the same period last year. This local surge is primarily driven by new apartment units, which are providing a much-needed boost to the city’s housing targets.

Will a Rate Cut Be Enough? 🤔💬

Even with inflation slowing down, experts like Mike Moffatt from Western University’s Ivey Business School argue that a single rate cut won’t be enough to stimulate construction in Ontario. He believes it will take two to three rate cuts to see significant movement in the housing market.

What's Next? 🌟🔮

The easing inflation, coupled with mixed signals from the labour market, points toward a possible rate cut in June. However, the upcoming inflation and economic data will be crucial in shaping the Bank of Canada's next move. Stay tuned, folks—this financial roller coaster is far from over!

SO WHAT? Your Takeaway 🎯

Whether you’re a homeowner, renter, or investor, it’s crucial to stay informed and prepared for the fluctuations in the market. The potential BOC rate cuts could bring some relief, but the underlying market dynamics suggest that any reprieve may be temporary. Keep an eye on the trends and make strategic decisions to navigate these uncertain times!

Thanks for reading! Feel free to leave a comment or get in touch with any questions or thoughts. Let’s weather this financial storm together! ☀️🌧️

P.S. Don't forget to pack that umbrella—you never know when a financial storm might hit! 😉


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