The Globe and Mail reports in its Tuesday, June 4, edition that when considering taking out or renewing a mortgage with a fixed interest rate, the Bank of Canada's rate announcement on Wednesday will only be significant if the central bank surprises financial markets, says CanWise president James Laird. The Globe's Erica Alini writes that this is because lenders set the fixed rates they offer to new borrowers based on bond return rates, which are affected by expectations about the central bank's key rate trajectory. Mr. Laird says investors have already priced in a rate cut in June or July. The key is what the BOC says about the rate decision on Wednesday.
Mr. Laird says if the BOC were to sound more timid about the pace or extent of future rate cuts than the consensus expectation, fixed mortgage rates could go up. He adds the opposite holds if the BOC were to appear more aggressive than expected on the timetable or overall magnitude of the cuts.
Mr. Laird says, "The words are what's going to matter."
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