Mortgage rate peak near economists: 'The end's not far away'
The short-term outlook for inflation and interest rates in Canada is a whole lot less clear since Friday's jobs report that signalled the economy is hotter than expected, but the long view is that borrowing costs and the pace of price increases are approaching their apex.
After Friday's report that Canada created almost 100,000 jobs last month, the Canadian dollar has shot up almost US2 cents to US91 cents in the past two trading days on bets the Bank of Canada is not done raising interest rates to corral inflation, and probably has one more quarter-percentage-point increase to go. That's a change from earlier last week, when the expectation was that the central bank's trend-setting target for overnight interest rates wasn't going any higher than the 4.25% it is now.
"If we are not done watching the Bank of Canada raise interest rates, we're 25 basis points from it, so the end's not far away," said Craig Wright, chief economist at Royal Bank of Canada.
The report that changed the view, and that has people calling mortgage brokers again on concern they should lock in before rates rise further, showed the economy created almost four times as many jobs as economists had expected. The unemployment rate dropped to 6.1%, the lowest since 1974.