Author: Consultant

Last Updated: October 25, 2023

Interest rate forecast for 2023: 5.00%*

• October 2023 Canada Mortgage Rate Forecast 

For more information about the 2023 Bank of Canada rate announcement schedule and upcoming 2024 announcement schedule, read more here 

• When will interest rates in Canada go down in 2023? 
• When is the next Bank of Canada rate increase and what can I expect?
• What is the interest rate forecast for 2023 in Canada? 
• What is CPI and how does it affect the Canada interest rate forecast?
• What affects the Bank of Canada’s interest rate forecast?  
• What is the mortgage interest rate forecast for 2023 in Canada?
• What are the interest rate predictions from the banks?

Key Takeaways (updated October 2023)

• The prime rate in Canada as of October 25, 2023 is 7.20%. (last change: +0.00% on October 25, 2023)
• On Wednesday, October 25th, 2023, The Bank of Canada announced that it will be holding its rate, keeping the policy rate at 5.00%.
• The Statistics Canada report published on October 17, shows that Canada’s inflation rate slowed in September to 3.8% from 4.0% in August, which was lower than expected by economists. This decrease was attributed to lower prices for various goods and services, such as travel, durable goods, and some grocery items, leading to a “broad-based” deceleration in the cost of living. On a monthly basis, the cost of living declined by 0.1% in September, the first decrease since November of the previous year. Gasoline prices contributed significantly to the annual rate, falling by 1.3% during the month but still up 7.5% over the past 12 months. Excluding gasoline, the inflation rate would have been 3.7%, down from 4.1% the previous month.
• Statistics Canada reported that the Canadian unemployment rate was unchanged at 5.5%, following three consecutive monthly increases in May, June and July.

2023 Predictions (updated October 2023)

• In 2024, it is expected that the Bank of Canada will cut rates by up to 2% and another 1% in 2025. This will result in lower payments for adjustable rate mortgage holders. We predict that key interest rate will hover around mid 4% in 2024 and mid 3% in 2025. TD economists predict the policy rate can reach 2.25% by 2025 as inflation slows and economic growth decelerates (Source: TD)

https://myperch.io/canada-interest-rate-forecast/

The Bank of Canada today held its target for the overnight rate at 5%, with the Bank Rate at 5¼% and the deposit rate at 5%. The Bank is continuing its policy of quantitative tightening.

The global economy is slowing and growth is forecast to moderate further as past increases in policy rates and the recent surge in global bond yields weigh on demand. The Bank projects global GDP growth of 2.9% this year, 2.3% in 2024 and 2.6% in 2025. While this global growth outlook is little changed from the July Monetary Policy Report (MPR), the composition has shifted, with the US economy proving stronger and economic activity in China weaker than expected. Growth in the euro area has slowed further. Inflation has been easing in most economies, as supply bottlenecks resolve and weaker demand relieves price pressures. However, with underlying inflation persisting, central banks continue to be vigilant. Oil prices are higher than was assumed in July, and the war in Israel and Gaza is a new source of geopolitical uncertainty.

https://www.bankofcanada.ca/2023/10/fad-press-release-2023-10-25/

Published: 10/30/2023 6:10 AM ET

Gold prices traded mixed on Monday, after having hit five-month highs last week on heightened geopolitical tensions.

Spot gold dropped half a percent to $1,996.34 per ounce, while U.S. gold futures were up 0.4 percent at $2,006.

Israeli troops have entered the Gaza Strip for the first time in nearly two decades, but it’s unclear whether the maneuvers mark the official start of an invasion.

After U.S. airstrikes targeted Iranian targets in Syria last week, there were fears that tensions could spread into a wider conflict.

The U.S. has advised Israel to delay ground invasion in Gaza to allow hostage negotiations.

The United Nations Security Council is due to be briefed on the humanitarian situation in Gaza today.

The Federal Reserve’s monetary policy decision along with reports on manufacturing and service sector activity remain in the spotlight this week amid fears of a looming recession.

The highly anticipated Federal Reserve interest-rate decision is due on Wednesday, with no change expected.

Traders expect the Bank of Japan to tweak its yield curve control policy when it wraps up a two-day policy meeting on Tuesday.

The Bank of England is to hold its penultimate meeting of the year on Thursday, with economists anticipating a ‘status quo policy update.’

Published: 10/30/2023 5:51 AM ET

Oil prices tumbled on Monday as Middle East worries eased, and investors looked ahead to a busy week of economic data and central bank meetings.

Benchmark Brent crude futures fell 1.6 percent to $87.75 per barrel, while WTI crude futures were down 1.7 percent at $84.06.

Israeli troops have entered the Gaza Strip for the first time in nearly two decades, but it’s unclear whether the maneuvers mark the official start of an invasion.

After U.S. airstrikes targeted Iranian targets in Syria last week, there were fears that tensions could spread into a wider conflict and disrupt global crude supplies.

The attack by the U.S. was in response to a flurry of recent rocket and drone assaults against American soldiers in Iraq and Syria.

On the economic front, investors await global manufacturing data and the all-important U.S. jobs report this week for clarity on the economic outlook.

The U.S. Federal Reserve, Bank of England and Bank of Japan are set to hold their monetary policy meetings this week, with economists expecting a status quo policy from the U.S. central bank and the U.K. central bank.

Analysts expect the Bank of Japan to potentially further tweak its yield curve control (YCC) policy when it meets on Tuesday.

Cooling inflation will likely keep the Federal Reserve on pause in coming months, traders bet on Friday, even as persistent underlying price pressures amid strong consumer spending kept some chance of a rate hike later this year in play.

The personal consumption expenditures price index, which is the Fed’s preferred inflation gauge, rose 3.4% in September from a year earlier, a Commerce Department’s Bureau of Economic Analysis report showed on Friday, and the core PCE price index, which the Fed takes a signal for future price pressures, rose 3.7%. That’s down from a 3.8% reading in August but well above the Fed’s 2% inflation target.

Consumer spending rose 0.7% in September from August, more than economists expected.

Still, traders continue to price in no chance the Fed will lift its policy rate from the current 5.25%-5.5% range at next week’s rate-setting meeting, and less than a 20% chance of an increase by the Fed’s December meeting, based on futures contracts that settle to the U.S. central bank’s target policy rate.

“Overall, spending remains positive, and inflation is slowing, a welcome combination for policymakers,” wrote analysts at High Frequency Economics. “We continue to expect a slower pace of growth going forward and a further easing in price pressures, which should keep the FOMC on the sidelines for the rest of 2023.”

Traders continue to expect a first Fed rate cut in June of next year, based on interest-rate futures pricing.

Fortis Inc. reported a third-quarter profit of $394 million, up from $326 million a year earlier.

The gas and power utility says the profit amounted to 81 cents per diluted share for the quarter ended Sept. 30, up from 68 cents per diluted share in the same period of 2022.

Revenue for the quarter totalled $2.72 billion, up from $2.55 billion.

On an adjusted basis, Fortis says it earned 84 cents per share in its latest quarter compared with an adjusted profit of 71 cents per share a year earlier.

The company says its increased profits reflect the new cost of capital parameters approved for the FortisBC utilities in September 2023, higher retail revenue in Arizona due to warmer weather and new customer rates at Tucson Electric Power, and rate base growth across its utilities.

It says earnings were tempered by lower long-term wholesale and transmission revenue, as well as higher operating and corporate finance costs.

This report by The Canadian Press was first published Oct. 27, 2023.

Imperial Oil Ltd. says it earned $1.6 billion in the third quarter of 2023, down from $2.0 billion in the prior year’s quarter.

The Calgary-based oil company says its profit worked out to $2.76 per share, compared with $3.24 per share in the same three-month period of 2022.

Imperial reported upstream production in the third quarter of 423,000 gross oil-equivalent barrels per day on average.

The company’s Kearl oilsands site reported its highest-ever quarterly production at 295,000 total gross oil-equivalent barrels per day.

Refinery throughput in the quarter averaged 416,000 barrels per day with refinery capacity utilization of 96 per cent.

Imperial says its quarterly cash flow from operating activities was $2.4 billion.

This report by The Canadian Press was first published Oct. 27, 2023.

Air Canada AC-T reported surging profits in its latest quarter as consumers continued to spend on travel, despite higher inflation and interest rates weighing on their wallets.

The country’s biggest airline saw net income for its third quarter jump to $1.25-billion from a half-billion-dollar loss in the same period a year earlier.

On Monday, chief executive Michael Rousseau said demand remains “very stable.”

Passenger revenues for the quarter ended Sept. 30 leaped 22 per cent year-over-year, he said. Adjusted earnings also surpassed those from 2019, the last year before the COVID-19 pandemic wreaked havoc on the travel industry.

The frothy earnings arrived despite lower flight capacity than four years ago and business from corporate customers sitting 25 per cent to 30 per cent below pre-pandemic demand, said network planning head Mark Galardo.

The smaller fleet may have contributed to a relatively weak on-time performance, which saw Air Canada rank ninth out of 10 major North American airlines, according to aviation data firm Cirium. Some 68 per cent of the carrier’s 32,000-plus flights in September arrived on time, versus between 76 per cent and 86 per cent for the top seven airlines, including WestJet.

Rousseau pointed to Air Canada’s nearly 90 per cent load factor – a key metric measuring the proportion of available seats filled by passengers – as one reason for the delays.

“While this signals that we use our assets very effectively, one consequences is it puts extra pressure on the operations. That said, our on-time performance progressively improved throughout the quarter,” he told analysts on a conference call.

Executives also acknowledged stiffening competition in the domestic, cross-border and sun destination markets, as Porter Airlines, Lynx Air and Flair Airlines embark on rapid expansions.

“Competition will continue to evolve. In particular, we’ve seen some moves into seasonal markets,” Galardo said, referring to those airlines’ heightened focus on sun-splashed getaways.

“We know we must continue to invest in our business and continuously improve to remain competitive and attract customers and maintain their loyalty,” Rousseau added.

Net income amounted to $3.08 per diluted share for the quarter ended Sept. 30 compared with a loss of $1.42 per diluted share a year earlier, the airline said.

Operating revenue totalled $6.34-billion, up 19 per cent from $5.32-billion in the same quarter last year, boosted by higher passenger revenues.

On an adjusted basis, Air Canada says it earned $3.41 per diluted share in its latest quarter compared with an adjusted profit of $1.07 per diluted share in the same quarter last year, far exceeding analyst predictions.

Analysts on average had expected an adjusted profit of $2.15 per share for the quarter, according to estimates compiled by financial markets data firm Refinitiv.

In its outlook, Air Canada said its adjusted cost per available seat mile for 2023 is expected to be about 1.5 per cent to 2.25 per cent above 2022 levels compared with earlier expectations its adjusted CASM would rise 0.5 per cent to 1.5 per cent.

https://www.ctvnews.ca/video?clipId=2795932&playlistId=1.6621171&binId=1.810401&playlistPageNum=1&binPageNum=1