Canadian housing market 'on its knees' as odds of Bank of Canada rate hike rise
The Bank of Canada is facing increased pressure to raise interest rates due to persistent inflation and rising energy costs. While a rate hold was previously expected, market traders and several major financial institutions now anticipate a 25-basis point hike.
Why it matters
A potential rate hike would further strain the already struggling Canadian housing market and increase borrowing costs for consumers.
And while an eighth-consecutive hold is widely predicted next week, a growing number of economists and traders are now expecting the central bank to hike its trend-setting rate to tamp down stubborn inflation.
The policy rate has stood still at 2.25 per cent since a quarter-point cut in October 2025.
But Bank of Canada Governor Tiff Macklem recently warned it may need to raise borrowing costs if energy prices remain elevated, saying on Saturday there is "no resolution in sight for the conflict in the Middle East" that has roiled global energy markets for the past several months.
On Monday, the latest inflation data from Statistics Canada put a spotlight on soaring energy costs. The report showed rising fuel prices have yet to meaningfully spill into other sectors of the economy. However, the Bank of Canada's latest survey, also released on Monday, found businesses are bracing for higher prices.
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