What would it take for the Bank of Canada to move interest rates?

The Bank of Canada held its benchmark rate steady for the fifth consecutive decision last week, and currently looks in no mood to step off the sidelines as economic uncertainty continues.

Most forecasters expect more of the same from the central bank for the foreseeable future – but that doesn’t mean rates are frozen forever. So what would actually need to happen for Bank decisionmakers to consider either a cut or a hike?

Sal Guatieri (pictured top), senior economist and director at Bank of Montreal (BMO) Capital Markets, told Canadian Mortgage Professional the bar for action in either direction is high, but not necessarily unreachable.

The case for a hike

One of the biggest threats to Canada’s economic outlook is no secret: surging oil prices since February as a result of the US-Israel war on Iran, putting upward pressure on inflation and squeezing Canadians at the pumps.

While positive news emerged late on Sunday as US president Donald Trump suggested an end to the war could be imminent, there’s still no sign of a deal – and if the war rumbles on and continues to spike the price of oil, Guatieri said it could spur the Bank into hiking rates.

“If higher energy costs do spread to other prices and we see a generalized increase in inflation, they may need to take action and raise rates,” he said.

Bond markets currently see an 8% chance of a 25-basis-point hike at the Bank’s July 15 meeting, rising to 32% by September 2, according to nesto.ca’s rate forecast tracker. Scotiabank is the most hawkish of Canada’s major banks, forecasting 50 basis points’ worth of hikes in the fourth quarter of the year.

The case for a cut

While inflation outlook remains troubling for the Bank, governor Tiff Macklem was frank about the current weakness of the Canadian economy in his remarks to the media last week – even if he stopped short of describing it as a recession.

While the labour market unexpectedly added nearly 90,000 jobs at last reading, the economy has sagged under the weight of US tariffs and broader uncertainty since the beginning of 2025 – and there seems little chance of it roaring back between now and the end of the year.

Further weakness in gross domestic product (GDP) could prove a key variable in the Bank of Canada’s approach to the rest of the year, according to Guatieri.

“If we see further shocks to Canada’s economy… if we see further evidence of weakness in the economy and no clear signs of a pickup in GDP growth in Q2, that could spur the Bank of Canada into action as far as providing more support to the economy by cutting interest rates,” he said.

Like Macklem, many major economists have questioned whether the country is actually in a recession despite recording consecutive GDP declines on a quarter-over-quarter basis.

The bottom line

Brokers and borrowers would undoubtedly welcome rate cuts because they could provide the impetus for the housing market to gather pace with a subdued first half of the year nearly over.

Affordability has remained a huge challenge in the housing sector, with Ratehub reporting that most Canadian markets saw buying prospects worsen in April thanks in part to climbing interest rates.

Still, a cut remains a distant prospect – and by far the most likely scenario is a prolonged hold by the Bank as the Iran conflict and CUSMA (Canada-United States Mexico Agreement) renegotiations continue.

Guatieri said it would take a significant deterioration in the economic outlook for the Bank to step off the sidelines and cut rates, while a hike is also unlikely.

“Unless something goes wrong further in the economy or with respect to tariffs… we’re unlikely to see the Bank of Canada cut interest rates,” he said.

CMP

We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

Please feel free to contact me via Direct/Text or e-mail at any time and my team will be pleased to assist you, family members and friends with all your real estate needs. Referrals are always welcome and rewarded!

It’s official: Canada is one of the world’s least affordable housing markets

 Canada ranks among the world’s least affordable housing markets, trailing the United States and the United Kingdom.

That finding comes from the 2026 Demographia International Housing Affordability report, released June 11 by the Frontier Centre for Public Policy. The report assessed 96 major markets across eight countries using the median multiple – median house price divided by median household income.

A ratio of 3.0 or below is considered affordable. Canada’s national median multiple reached 5.4, placing it in the “severely unaffordable” category.

For context:

• United States: 4.5
• United Kingdom: 5.2
• Canada: 5.4

Canada was also one of only two nations in the study to record no improvement in housing affordability in 2025. Four of the eight countries surveyed posted measurable gains.

Nine quarters of improvement, one stubborn ceiling

The Demographia findings land alongside data that looks, on the surface, more encouraging.

National Bank of Canada’s Housing Affordability Monitor, published May 26, 2026, recorded a ninth consecutive quarterly improvement in Q1 2026 – the longest such streak in Canadian history. The mortgage payment as a percentage of income fell to 52.3 per cent nationally. That is its lowest level in four years.

But that record run, read alongside Demographia, defines the bind brokers are working inside. Affordability is improving by cyclical measures. Canada remains structurally among the least affordable nations in the world.

The National Bank data shows the gaps:

MPPI = mortgage payment as a percentage of income. Source: National Bank of Canada Housing Affordability Monitor, Q1 2026.

City	MPPI Q1 2026	Long-term average	Above average by
Vancouver	81.9%	66.1%	+15.8pp
Victoria	74.5%	59.3%	+15.2pp
Toronto	70.9%	54.4%	+16.5pp
Hamilton	59.0%	42.6%	+16.4pp
Calgary	39.3%	36.3%	+3.0pp
Edmonton	33.3%	30.2%	+3.1pp

All six markets remain above their long-term averages. Edmonton and Calgary are the closest to normal, while Vancouver, Toronto, and Victoria remain the most stretched.

Vancouver, Toronto, and the limits of progress

Canada’s affordability problem is sharpest at its two biggest markets.

Vancouver recorded a median multiple of 10.8. That places it among the world’s least affordable major markets, behind only Hong Kong, Sydney, San Jose, and Adelaide.

Toronto recorded 7.6, remaining firmly in the severely unaffordable range.

Edmonton was the outlier. At 3.6, it is Canada’s most affordable major market – and the highest affordability ranking ever achieved by a non-American market in the survey’s 22-year history.

Not a single market among the 96 studied hit Demographia’s affordability benchmark. American cities Cleveland (3.1) and Pittsburgh (3.2) came close.

“Many Canadians assume housing affordability challenges are simply the result of growing cities and strong demand, but the international data tell a different story,” said Wendell Cox, principal author of the report.

“Canada now ranks among the least affordable housing markets in the developed world despite having abundant land and resources. The evidence shows that housing affordability is strongly influenced by policy choices that affect land supply and housing development.”

Policy, not demand

The report pushes back on the idea that Canada’s affordability crisis is primarily a demand problem.

Wendell Cox pointed to restrictive land-use policies – urban growth boundaries, greenbelts, and development constraints – as strongly associated with higher housing costs. The report points to New Zealand as a counterexample: a government that has moved to dismantle policies blamed for restricting land supply.

The downstream effects for brokers are direct. Higher median multiples mean:

• larger required down payments
• higher debt loads for clients entering the market
• reduced labour mobility as households are priced out of employment centres

“The goal should be to restore housing affordability for ordinary households,” Cox said. “The experience of many jurisdictions shows affordability can improve when governments remove barriers to housing supply and allow development to respond to demand.”

What brokers should watch

National Bank’s economists flagged that the improvement streak may face pressure in Q2 2026. Mortgage rates have resumed an upward trend following expectations of tighter monetary policy.

Home prices fell nationally in April 2026 – declining in six of eleven cities – which may partially offset that pressure. But the Demographia data draws a clear line between cyclical relief and structural affordability.

Canada’s nine-quarter improvement streak has brought the mortgage payment-to-income ratio back to 2022 levels. For brokers advising clients in Vancouver and Toronto, the gap between short-term gains and long-term affordability remains the defining challenge of the current market.

CMP

We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

Please feel free to contact me via Direct/Text or e-mail at any time and my team will be pleased to assist you, family members and friends with all your real estate needs. Referrals are always welcome and rewarded!

What the BoC rate hold means for Canada’s housing market

The Bank of Canada’s decision to hold its benchmark interest rate steady on Wednesday came as no surprise to the mortgage industry – and it’s unlikely to move the needle for the national housing market outlook, according to a top economist.

Sal Guatieri (pictured top), senior economist and director at Bank of Montreal (BMO) Capital Markets, told Canadian Mortgage Professional the outcome was squarely in line with expectations, with the central bank striking a cautious tone amid clear economic risks.

And homeowners and buyers shouldn’t count on much rate relief coming from the Bank in the months ahead, he said.

“The Bank is pretty comfortable holding policy steady,” Guatieri said. “That seems to balance the risks between a weak economy and potential inflation pressures stemming from higher energy costs. So there’s really no indication the Bank is ready to move on interest rates in either direction.”

The good and bad news from the latest BoC announcement

The sluggish Ontario and British Columbia housing markets have weighed on the national outlook in the first half of the year, and the latest BoC hold likely means more of the same, according to Guatieri.

Still, there’s a glimmer of good news: Bank decisionmakers clearly aren’t in any mood to cut rates, but a hike also doesn’t seem to be in the cards.

“Unfortunately, the soft housing markets in Ontario and BC likely will not receive much support from lower borrowing costs anytime soon,” Guatieri said. “But at least there’s some relief for potential buyers and even sellers who want to list their property and get a decent price. There’s no clear signs that borrowing costs will go up anytime soon either.”

The Toronto-area market has recorded three consecutive months of rising home sales, sparking some hope of a market recovery although volumes remain at depressed levels and prices continue to drift lower.

A more sustained recovery isn’t expected until affordability improves further – but Guatieri believes that could begin to take shape towards the end of the year.

“We’re getting closer to more reasonable affordability in the Ontario housing market,” he said. “We’re not quite there yet. So we will probably see continued softness in prices for a little while this year before we start to see a sustained pickup in sales and stabilization in prices.”

Outside Ontario and BC, Guatieri noted, the national housing market appears relatively healthy with sales running close to normals and prices rising modestly across most of the country.

What’s next for the Bank of Canada?

While most industry members viewed a June rate hold as a foregone conclusion, many were closely watching the language of its statement to see if it would give any indication of its next steps.

But the central bank’s statement was largely down the middle, with nothing to suggest it will veer from its current preference to hold rates where they are.

Only a significant deterioration in the national economy, Guatieri said, would raise the prospect of rate cuts – while an inflationary spike would likely increase the odds of a rate hike.

But with the Iran conflict and CUSMA (Canada-US-Mexico Agreement) renegotiations unresolved, BMO still sees a prolonged rate hold as the likeliest BoC strategy for the rest of the year.

“It’s just going to sit on the sidelines for quite some time – to see how the Iran conflict plays out, to see how CUSMA renegotiations play out,” Guatieri said.

Canadian financial markets, unsurprisingly, showed little reaction to Wednesday’s announcement. The Canadian dollar remained largely unmoved, while five-year Government of Canada bond yields – which strongly influence fixed mortgage rates – saw little change.

For now, brokers and borrowers should count on rates holding steady barring dramatic developments in Iran or for the economy, Guatieri said.

“There’s just too much uncertainty now, both about the Iran conflict and trade policies,” he said. “So there’s no reason to make a rash move in either direction on policy rates.”

CMP

We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

Please feel free to contact me via Direct/Text or e-mail at any time and my team will be pleased to assist you, family members and friends with all your real estate needs. Referrals are always welcome and rewarded!

Here's why Canada's housing supply crisis is far worse than the US

A new report from the Canada Mortgage and Housing Corporation (CMHC) has put a hard number on what two decades of regulatory inertia and geographic constraints have cost Canadians, and the comparison with the United States is damning.

Using modelling drawn from Organisation for Economic Co-operation and Development (OECD) research, CMHC chief economist Mathieu Laberge found that Canada's housing stock would be approximately 30% larger today and home prices roughly 10% lower had the country's residential construction industry matched the responsiveness of American builders between 2006 and 2024.

Why Canada can't build at the pace the market demands

Three structural forces explain the gap. First, municipal zoning and land-use rules are far more restrictive in Canada than in many American cities.

In many US metropolitan areas, fewer zoning and land-use constraints make it significantly easier for builders to increase supply when demand rises.

In Canada, tighter regulations, particularly in major urban centres, have slowed development and limited the number of homes built. 

Geography is the second barrier. Cities like Vancouver and Montreal are bounded by mountains and waterways that physically restrict outward expansion, constraints that simply do not exist to the same degree across most US markets.

The third factor is demographic: Canada's comparatively small network of large cities leaves households with fewer comparable alternatives when seeking work, reducing the competitive pressure that, in the US pushes developers to respond quickly when demand spikes. 

The toll of regulatory drag is measurable. A separate CMHC study, published in February 2026, found that when a city's land-use rules become 10% more restrictive, house prices rise by approximately 14%. That's a compounding penalty that has accumulated across two decades of municipal inaction on housing approvals.

Vancouver and Toronto, the country's most constrained markets, recorded rezoning approval rates of just 47%. 

Taxation makes the economics even harder

Regulation is not the only obstacle. Taxation accounts for roughly 36% of the cost of a new home in Canada, with development charges, HST and land-transfer taxes making up the largest share.

University of Ottawa economist Mike Moffatt, described the situation as "a cost-of-delivery crisis," one in which it is "simply too expensive, by policy design, to build homes that middle-class families can afford, even before land and profit are considered."

CIBC deputy chief economist Benjamin Tal has been blunter still. "The market is broken, the market is frozen," he said. "It's too expensive to buy, not expensive enough to build."

The Carney government has pledged a response: Build Canada Homes will deploy approximately $25 billion in public financing for prefab and affordable housing alongside $10 billion in low-rate capital, while a 10-year, $51-billion Build Communities Strong Fund targets roads, water and transit infrastructure. GST relief on new homes under $1 million for first-time buyers is also in place.

CMP

We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

Please feel free to contact me via Direct/Text or e-mail at any time and my team will be pleased to assist you, family members and friends with all your real estate needs. Referrals are always welcome and rewarded!

Bank of Canada urges calm amid Canada's technical recession label

The Bank of Canada moved quickly to temper recession fears on Monday, with senior deputy governor Carolyn Rogers cautioning parliamentary lawmakers against drawing conclusions from two consecutive quarters of economic contraction.

Statistics Canada confirmed on May 29, 2026 that real gross domestic product declined at an annualized rate of 0.1% in the first quarter. That's the second consecutive quarterly contraction after a downwardly revised 1.0% decline in Q4 2025.

By one standard definition, that sequence meets the threshold for a recession. Rogers, however, pushed back firmly on any rush to apply that label in full.

"Two quarters of annualized contraction in GDP does meet one definition of a recession. But simply the fact that you have to put the term 'technical' in front of it sort of tells you that you need to really look past that one indicator," Rogers told the parliamentary committee.

For mortgage brokers navigating a market already shaped by economic anxiety, the Bank's message is timely.

According to the Ownright Operators Report, which surveyed 1,015 real estate professionals across Canada between March 27 and April 29, 2026, 40% of respondents cited broader economic anxiety, including recession fears, as the primary reason buyers and sellers were holding back, outranking interest rates and employment concerns. 

What the data actually shows

The Q1 2026 result fell short of consensus expectations. A surge in imports, roughly half driven by gold purchases, was the primary drag, partially offset by a build-up in business inventories.

Business capital investment fell 0.7%, its fifth consecutive quarterly decline, while investment in residential structures contracted 2.0% and resale housing activity dropped 9.9% during the quarter. 

However, a flash estimate for April, cited by Rogers before the committee, pointed to a 0.4% rebound in industry-based GDP.

"I think we need to be careful not to put too much weight in any one indicator," she said.

Read more: What Canada's GDP miss means for the next BoC rate call

Implications for the June 10 rate decision

Economists have largely avoided applying the recession label in full.

Derek Holt, vice president and head of capital markets economics at Bank of Nova Scotia, wrote in a note to investors that "normally you need an extended period of contraction in readings like jobs and industrial output to call a recession. We don't have that at this point and there is a higher bar to calling recession on these readings than a handful of months."

Sal Guatieri, senior economist and director at BMO Capital Markets, previously told Canadian Mortgage Professional that the Bank of Canada appeared to be "on hold for the foreseeable future," but cautioned: "If the trade war ends up causing further harm to our economy, the Bank may need to cut rates."

Meanwhile, Toronto mortgage broker Drew Donaldson previously noted in CMP that a weaker economy could eventually lead to lower rates and bond yields, potentially supporting housing activity for qualified buyers despite near-term volatility. 

Rogers confirmed the Bank will incorporate both the GDP figures and the forthcoming May labour force survey into its June 10 deliberations, a rate call now carrying considerable weight for brokers advising clients on timing and product selection.

CMP

We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

Please feel free to contact me via Direct/Text or e-mail at any time and my team will be pleased to assist you, family members and friends with all your real estate needs. Referrals are always welcome and rewarded!

What Canada's GDP miss means for the next BoC rate call

Canada slipped into a technical recession in the first quarter of 2026, with Statistics Canada confirming on May 29, 2026 that real gross domestic product contracted at an annualized rate of 0.1%.

The latest figure fell dramatically short of consensus expectations for 1.5% growth and set up a closely watched Bank of Canada rate decision on June 10.

The Q1 decline follows a downwardly revised contraction of 1.0% in Q4 2025, revised lower from the initial estimate of -0.6%. It means the economy has now contracted in three of the last four quarters.

On a year-over-year basis, real GDP was also down 0.1% in the first quarter. 

BMO chief economist Douglas Porter, writing in a research note released Friday, described the result plainly: "There's no sense sugar-coating this sour result, as the economy has clearly been struggling to grow since the start of the trade war."

The Q1 weakness was driven primarily by a surprise 2.4% decline in government spending, which provided a consistent floor under growth in prior quarters, alongside a 3.2% contraction in business investment — its fifth straight quarterly fall — and a near-8% drop in residential investment.

Consumer spending held up at 1.5%, though Porter noted this segment "is now dealing with the energy shock."

What the data means for rate policy

On the rate outlook, Canada's major bank economists broadly align on a June 10 hold.

Andrew Hencic, director and senior economist at TD Economics, argued in a May 29, 2026 research note that the headline miss likely overstates the true weakness.

"The disappointing first quarter figure likely overstates the weakness in the economy as net trade remains noisy and materially subtracted from first quarter growth," Hencic wrote.

He pointed to a strong April flash estimate, a projected 0.4% monthly rebound, as evidence that Q2 should see a bounce-back.

His conclusion was direct: "Our view remains that as the economy continues to operate below capacity, and if the inflation shock fades, the Bank of Canada will remain on the sidelines."

CIBC economist Katherine Judge echoed that view, concluding that the positive momentum implied by the April reading would keep the Governing Council on hold. 

Porter was equally direct on rate-hike talk: the economy, he argued, "is in no condition to deal with higher rates." 

A bounce-back that depends on trade

The Q2 outlook hinges on forces largely outside the Bank's control. Porter acknowledged that a trade deal or lower energy prices would support a rebound, but cautioned that "we can't necessarily rely on either just yet."

Exports fell 4.1% year-over-year, a direct casualty of United States tariff pressure, while business investment continued its retreat as firms held back capital spending pending greater clarity on the trade relationship.

CMP

We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

Please feel free to contact me via Direct/Text or e-mail at any time and my team will be pleased to assist you, family members and friends with all your real estate needs. Referrals are always welcome and rewarded!

What the new Fed chair means for Canada

Kevin Warsh was sworn in as the 11th chair of the Federal Reserve on May 22, 2026, replacing Jerome Powell after an eight-year tenure.

For Canadian mortgage brokers, the leadership change carries real implications, even though the Fed sets no policy in Ottawa.

The Fed's approach to interest rates directly influences US Treasury yields, which in turn shape Government of Canada bond yields and, by extension, Canadian fixed mortgage rates.

That transmission channel makes Warsh's every move relevant to brokers advising clients on rate-sensitive decisions here at home.

What kind of Fed chair will Warsh be?

Warsh was viewed by some observers as a surprisingly hawkish pick, having repeatedly highlighted the inflation risks posed by lower interest rates, yet Trump will likely still expect his new chair to pursue rate cuts, potentially complicating the outlook for the Bank of Canada. 

Odeta Kushi, deputy chief economist at First American, told Mortgage Professional America that leadership changes are unlikely to materially alter the Fed's policy direction overnight.

"Although the chair influences communication and risk framing, policy is ultimately set by a committee where the chair holds just one vote," she said. 

Doug Porter, chief economist at Bank of Montreal (BMO) in Toronto, made a similar point when speaking to Canadian Mortgage Professional earlier this year.

"What I find interesting is that financial markets, which know darn well what's going on here, are really not pricing in anything unusual for the rest of the year," he said. 

"So despite all the noise around the Fed, the market’s still pretty comfortable that nothing really unusual is going to transpire for US interest rates this year, because I think the view is that the governance structures there will not allow a new Fed chair to just rule the roost and do whatever they want."

What this means for Canadian fixed mortgage rates

For the millions of Canadians navigating the mortgage market in 2026, conditions remain difficult.

Five-year bond yields have risen by 0.35 to 0.40 percentage points since the Iran conflict began, and most forecasts now place bond yields in the 3.0% to 3.5% range through 2026, with an upward bias. 

Read more: Bond yields hit their highest level this year

A large divergence between Fed and Bank of Canada policy could also put pressure on the loonie — something brokers should monitor closely when advising clients locked into or considering variable-rate products. \

The Bank of Canada held its overnight rate at 2.25% at its April 29, 2026 rate announcement, with its next decision scheduled for June 10, 2026.

The broker's bottom line

Brokers should resist framing the Warsh appointment as an automatic tailwind for lower rates.

While Warsh is seen as more willing to cut rates than Powell, major economic obstacles — including 3.8% US inflation, elevated energy prices, tariffs, and resistance from other FOMC members — make a quick reduction in mortgage rates unlikely, with most analysts suggesting rate drops won't materialise until late 2026 or 2027 at the earliest. 

For clients navigating renewal decisions in a high-rate environment, the Warsh era is one of watchful waiting, not yet a reason to lock in, hold off, or pivot strategy.

CMP

We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

Please feel free to contact me via Direct/Text or e-mail at any time and my team will be pleased to assist you, family members and friends with all your real estate needs. Referrals are always welcome and rewarded!

New report predicts BoC rate holds, warns of rocky summer ahead

Canada's economy entered 2026 on surprisingly firm footing. But elevated oil prices, mounting trade uncertainty and a slumping Quebec labour market are now darkening the horizon. Mortgage professionals will feel the effects on their clients' borrowing decisions before the summer is out.

That is the central message of Desjardins Group's latest economic outlook, which keeps the Bank of Canada on hold while warning that the path ahead is considerably more fraught than it appeared at the start of the year.

The report, which covers both the Canadian and global economy, captures a moment of fragile resilience that belies a string of accumulating risks.

Oil shock offers a mixed blessing for Canada

The persistence of conflict in Iran, which has spread throughout the Persian Gulf region according to the Desjardins report, has kept crude oil prices hovering around US$100 per barrel and is expected to hold them elevated over the coming months.

For Canada, a net energy exporter, this dynamic cuts both ways.

On the positive side, Desjardins expects elevated oil prices to lift business investment and net exports, particularly in the energy sector, providing a modest boost to federal revenues and supporting activity in Alberta and other resource-heavy provinces.

Added to that, fiscal measures including a temporary fuel tax cut and the expansion of the Goods and Services Tax (GST)/ Harmonized Sales Tax (HST) credit — scheduled to roll out on June 5, 2026 — are expected to cushion the blow to household consumption from higher energy prices, according to the report.But the same oil shock is feeding inflationary pressure that complicates the Bank of Canada's ability to act. The Bank of Canada is likely finished moving rates for the rest of 2026, according to Dr. Sherry Cooper, chief economist at Dominion Lending Centres Group (DLCG).

She argued that April's consumer price index jump was essentially conflict-driven noise the central bank can look through.

Desjardins reaches a similar conclusion, noting in its May 2026 report that the upcoming Canada–United States–Mexico Agreement (CUSMA) joint review represents a notable headwind that should keep the Bank on hold in the near term. 

On April 29, 2026, the Bank of Canada confirmed it is holding its overnight rate at 2.25%, with the next rate decision scheduled for June 10, 2026. 

Quebec's labour market raises regional red flags

While the national outlook is cautious, Desjardins' May 2026 report singles out Quebec as a province facing distinct and compounding pressures.

The firm cut its 2026 real GDP growth forecast for Quebec from 0.8% to 0.6%, citing a run of softer data over the past month.

Quebec's labour market is, by Desjardins' account, in a slump. April's employment figures showed the province recorded the steepest employment decline in the country, with full-time jobs posting the greatest losses.

Quebec accounted for a drop of 43,000 jobs last month. That's nearly the entire national decline, with that province also bearing most of the cumulative loss of 112,000 positions recorded across Canada this year.

This compounds a slowdown that was already evident before the Middle East conflict began, with real GDP in January sitting 0.7% lower than it was 12 months earlier.

CUSMA review looms as the summer's defining risk

Desjardins frames the CUSMA joint review as among the most significant economic events of the year, and one that has a direct bearing on the Bank of Canada's rate path.

The review introduces the kind of structural uncertainty — across industries from energy and agriculture to manufacturing — that tends to delay both business investment and household borrowing decisions.

Desjardins, for its part, anticipated a longer-than-consensus period of high oil prices and, as a result, says its outlook for the Bank of Canada and the US Federal Reserve remains largely unchanged from earlier in the year.

CMP

We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

Please feel free to contact me via Direct/Text or e-mail at any time and my team will be pleased to assist you, family members and friends with all your real estate needs. Referrals are always welcome and rewarded!

Canada's April inflation jumps as gas prices fuel rate debate

Canada's annual inflation rate surged to 2.8% in April, the fastest pace of price growth since May 2024.

War-driven energy costs delivered a jolt to the consumer price index, framing the Bank of Canada's June 10 rate decision as the most consequential of the year.

Statistics Canada reported Tuesday that inflation has moved up due to higher oil prices linked to the war in the Middle East.

Gasoline prices rose 28.6% year-over-year last month, the principal force pushing the April CPI reading from March's 2.4% to its current level.

The conflict in Iran, which began on February 28 and disrupted global crude oil shipments, has sent prices climbing at the pump since March.

April also marked the seasonal shift to pricier summer fuel blends.

Compounding the base-year comparison, Ottawa's removal of the consumer carbon levy in April 2025, which had suppressed fuel costs a year earlier, has now fallen out of the 12-month window, pushing annual comparisons higher rather than dampening them.

Excluding gasoline entirely, Statistics Canada noted that the consumer price index rose by a more modest 2.0% year-over-year in April, a figure that will provide some comfort to the Bank's Governing Council as it weighs its options ahead of the June announcement.

Energy prices as a whole were 19.2% higher compared with a year ago, the fastest pace since 2022, driven by transportation costs that climbed 7.6% in April — their highest since November 2022.

On a monthly basis, the CPI rose 0.4%, below economist forecasts of 0.7%.

Energy drives the headline, but core tells a different story

For mortgage professionals, the more closely watched numbers are the Bank of Canada's preferred core inflation gauges, and here the April data offered a more benign reading.

The average of the trim and median metrics came in at 2.05% — the lowest since January 2021 — as the central bank's deliberate strategy of looking past short-term energy volatility appeared, for now, to be vindicated.

CPI-trim fell to 2.0% in April from 2.2% in March, hitting target for the first time in more than five years, while CPI-median eased to 2.1% from 2.3%. TD

Inflation excluding food, energy and indirect taxes slipped to 1.5%, also its lowest since March 2021. In the words of BMO Economics chief economist Douglas Porter, that reading suggests that "if it weren't for those bothersome items like filling up your car and paying for groceries, there would be almost no inflation."

Outside of energy, several inflation categories softened in April. Food price growth eased to 3.5% from 4.0% in March, with grocery items including chicken, fresh vegetables, coffee and tea all seeing slower price increases.

Rent inflation pulled back to 3.6% — its lowest since January 2022 — with particularly sharp easing in British Columbia, the only province where headline inflation did not accelerate in the month.

Mortgage interest costs have also become a source of disinflation, falling 0.1% year-over-year, the first annual decline since mid-2022.

Prime minister Mark Carney's government announced a five-month relief measure on gasoline excise duty of 10 cents per litre, which helped moderate April's monthly increase.

However, analysts noted that with crude oil prices remaining elevated — West Texas Intermediate hovering near the $100-per-barrel mark — the relief may provide limited relief to borrowers facing higher energy bills alongside the upcoming mortgage renewal wave.

What it means for the June 10 decision

April's CPI report is the last major inflation data the Bank of Canada will see before its June 10 announcement, which mortgage professionals across Canada are watching closely.

The central bank has held its policy rate at 2.25% at each of its four decisions this year, and most economists expect that pattern to hold.

Leslie Preston, managing director and senior economist at TD Economics, noted that higher energy costs have not yet filtered through to core inflation.

"Core inflation cooled in April," Preston said. "There is little argument yet for Bank of Canada rate hikes here."

TD Economics expects the Bank to keep its policy rate at 2.25% for the duration of 2026.

Scotiabank's chief currency strategist Shaun Osborne was similarly measured in his reading of the April data, saying headline inflation was "a bit softer than expected while core measures also eased," and concluding that "the Bank of Canada can be patient."

The Bank's own minutes from the April 29 decision noted that "members agreed that they had scope to be patient for now, but the situation could change quickly, and monetary policy might need to respond to guard against the risk that inflation broadens and becomes more persistent." 

CMP

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