Will Interest Rates Go Down

If you want to know when interest rates will start to go down, follow Canada inflation reports.

Inflation means that prices for consumer goods and services are going up. The reason they are going up is because consumer demand is higher than the supply of these goods. More people want things than are available. So, people are willing to pay more for the things that they want.

In order to combat inflation, we need to increase the supply of things and lower consumer demand for things. Increasing prices of goods will decrease demand which in turn will help lower inflation. Hence, the Bank of Canada is increasing interest rates in an effort to slow consumer demand. The goal is to bring inflation back to around 2% and interest rates will continue to rise until we can reach this target. As demand goes down, then inflation will go down.

As of December 2022, inflation was 6.3% which is still far away from the 2% target. Thus, expect interest rates to continue increasing until we get inflation down to about 2%. It is hard to say when this will happen, hopefully by the end of 2023, but 2024 is more likely.

Once inflation is about 2%, then we can expect a period of stability and then expect interest rates to come down to stimulate demand once again. This could take a couple of years.

Contact Us

For more information on interest rates, contact your local Ajax Mortgage Broker, Sean Stewart at 905-427-9596 or sean@seanastewart.com