Canadian consumer prices rose 1.2 per cent in the twelve
months to December, a modest increase from 0.9 per cent inflation in
November. The Bank of Canada's index of
core inflation, which strips out the most volatile components of the CPI, such
as food and energy prices, increased 1.3 per cent in December. Consumer prices
in BC were unchanged in December on a year-over-year basis.
The Bank of Canada's repeated messaging around downside
risks to inflation continue to have their desired effect. The five-year
Government of Canada bond yield, the key benchmark for fixed mortgage rate
pricing, has now fallen over 30 basis points since the beginning of the year to
under 1.6 per cent, prompting lenders to cut posted mortgage rates. While we
still anticipate that mortgage rates will be higher at the end of the year, a
continued low-rate environment early in the year should provide a boost to the
market heading into the spring home-buying season.
Copyright BCREA – reprinted with permission
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