APRIL: Bank of Canada Holds.. But Here’s What Actually Changed.

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Here are the highlights:

  • Interest Rates unchanged:
    • Bank of Canada has left interest rates unchanged.  Prime Rate stays at 4.45%
    • Bond yields & fixed rates still elevated following last month’s surge.
    • The Bank is looking through the short term impacts of the war but “will not let higher prices become persistent inflation.”
  • Economic Indicators:
    • Growth outlook for Canada little changed after Q4 contraction
    • Anemic 1.2% grow expected for 2026
    • Global growth expected to be 3% this year
  • Job Market:
    • Employment little changed in March (+0.1%) following -0.5% decline in prior 2 months
    • Unemployment remains at 6.7%
    • ​​Labour participation rate down 0.4% year over year
  • Inflation:
    • CPI jumps to 2.4% (up from 1.8% in February)
    • The surge reflects the initial impact of the war in Iran.
    • Inflation will rise in coming months due to energy price shock
  • Forecasts:
    • 1 to 2 rate hikes (0.25% – 0.5%) expected by year-end
  • Next Bank of Canada Meeting:
    • Scheduled for June 10th, 2026

Good morning,

No movement on rates this morning by the Bank of Canada but it’s the second half of 2026 where things could get spicy.

The key issue stemming from the war in Iran will be inflation.  Approximately 20% of global oil consumption passes through the Strait of Hormuz.  Over 1 billion barrels of oil has been impacted thus far but that supply disruption doesn’t fully cast its shadow on inflation immediately.  It works through the system in stages.

Initially, oil prices spike in real time — oil nearly doubled over the span of a month.  


Then, refined products like gasoline, diesel, jet fuel, start to surge, and from there, transportation & production costs begin to rise which gradually feeds into the price of goods & services over the following months.  

Businesses start adjusting pricing cautiously at first, then more broadly as higher input costs persist.  The pressure compounds over time.  The longer the strait is closed, the worse it gets. 

The Bank of Canada has more or less downplayed the inflation risk, which makes sense.  They don’t want to stoke the inflation concerns & make the situation worse, but make no mistake, there is meaningful upside risk to longer-term inflation if this draws out. 

INFLATION EXPECTATIONS:


So how do you think about this with your mortgage?  Right now there are no imminent rate moves being priced in.  We’re 4-5 months from a potential rate hike.  Unless you can get really favourable lock in rate close to 4%, when I model out the expected path of hikes it still makes sense to hold the fort if you’re in a variable.

Staying variable gives flexibility to benefit if inflation fades.  You own the short term risk looking forward to long-term potential savings. 

Locking into fixed buys certainty & would be a defensive move to pay more today to protect from paying a lot more by next year, if the conflict doesn’t de-escalate soon.

If you’re in fixed, and you’re coming up for renewal this year or next, the time to look at your renewal is now.  Get in touch with me if you haven’t already, so I can run the math & go over your range of options & outcomes.  

The Bottom Line: the mortgage decision in front of you right now isn’t just a rate question — it’s a risk tolerance question.  How comfortable are you with the uncertainty over the next 12-18 months & what would it cost you if you’re wrong?

There’s no universally right answer, but there is a right answer for your situation — and that’s exactly what I’m here to help figure out.  

The window to act with options still in front of you is open.  Let’s make sure you use it.


WHY YOUR RENEWAL CLOCK STARTS EARLIER THAN YOU THINK

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I try to get clients to think about renewals early.  When a renewal is 8-12 months away, everyone moves slowly.  It’s not a priority & most think, “future me will sort it out when I need to.”

But the unexpected happens all the time.  Last month fixed rates surged up nearly 0.75% on some terms in the span of 2 weeks.

There are A LOT of borrowers with mortgages coming due in the next 6 months kicking themselves for not being proactive & already having rate holds in place.  

These kinds of moves cost clients thousands & thousands of dollars.  

If you have any friends or family with mortgage renewals this year or next, get in touch with me today.