Last week there was more bad news for the Canadian economy which may put further pressure for the Bank of Canada to lower its rate. This in turn would impact the Prime Rate that mortgage customers will pay a variable rate mortgage.

Between the weak data, factory closures, and federal bailouts, there was increased pressure put on the Bank of Canada for another rate cut.

Down: StatCan reported that August manufacturing sales dropped 1.0% and wholesale sales fell 1.2%.

Down: The federal government confirmed its financial relief package for the softwood lumber sector that is impacted by tariffs.

While government spending can cause inflation, the market interpreted this government package as a clear signal of the severe economic damage being inflicted by the trade war. Some of the damage is irreversible and will impact the rate market for many quarters.

Down: Stellantis’s decision to close its Brampton plant was a clear sign of what the US trade policy really means for Canada.

Up: The U.S. Federal Reserve described a “hiring chill” and “muted” labour demand, suggesting economic cooling. However, it also explicitly noted that tariffs are pushing up prices, adding to inflation pressures. That uncomfortable mix sent US treasury yields higher. ​

Up: The U.S. Empire State manufacturing index increased 19.4 points which was well above forecasts. This revealed improving hiring and rising inflation for the state of New York.

For the Bank of Canada meeting on October 29 there is roughly a 60% chance of a ¼% rate cut. Keep in mind this will only impact the Prime Rate and not necessarily the fixed rates.

If you need more information regarding mortgages or if you need any advice on your personal situation please contact our office at 604-556-3893 or email at alex.kotai@ymscanada.ca.

For more information on our mortgage products and your preferred Abbotsford Mortgage Broker please visit our website at www.ymscanada.ca.

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