Market Watch

The Bank of Canada¹ raised its key interest rate on July 12, with the increase widely expected to be the last for a while.

Given the central bank’s inflation target of 1% to 3%, June’s year-over-year reading of 2.8% gave hope that inflation was under control. However, inflation reversed its recent downward trend by rising 3.3% in July², suggesting interest rates may remain higher for longer to help cool the overheated economy.

Compared to June, Canadian home sales in July eased by 0.7%. “July continued along the same trend we’ve seen emerge in recent months, with sales levelling off and new listings returning in more normal numbers,” said Larry Cerqua, Chair of CREA. “This has been giving buyers more choice and balancing the market, which as of July was also slowing the rate of price growth.”³

In the labour market, June’s unemployment rate rose to 5.4%, according to Statistics Canada⁴, its highest level since February 2022. Nonetheless, Canada’s unemployment rate stayed below its pre-pandemic average of 5.7% (for the 12-month period ending February 2020)

In the Spotlight – Tips on managing your money when interest rates rise.

1. Pay off or consolidate your high-interest debt. With one interest rate, you are minimizing your payments, reducing the amount of interest you are paying, and giving yourself more money to put into a savings account or spend in other areas.
2. Put your money into a savings account. Open a savings account to help you reach your financial goals. Earn interest while maintaining access to your funds.
3. Renew your mortgage as soon as possible.
4. Talk to your financial advisor.
5. Consider a home equity line of credit or a loan. Opting for a home equity line of credit or loan versus a regular line of credit can help you secure a reduced rate.Make a balanced budget

Fact vs Fiction

Here are the three most common misconceptions around budgeting. Do any of these sound familiar to you?

1. I budget by keeping track of everything I spend.
2. I am debt-free, so I don’t need to budget.
3. Budgeting is for those who have extra money and time.

Quick Fact

Getting professional financial advice is a big step towards achieving your financial goals. In fact, 80% of investors say their advisor helped them save.²

Did you know?

Financial wellness is a relative measure of how well a person manages their financial life. Improving financial wellness is about practicing better money habits, setting goals and taking steps to achieve them. Manage your short-term finances. Making small changes can also help you reach your financial goals.

¹https://www.bankofcanada.ca/core-functions/monetary-policy/key-interest-rate/
²https://www.bankofcanada.ca/rates/price-indexes/cpi/
³https://www.crea.ca/media-hub/news/canadian-home-sales-see-little-change-from-june-to-july/
⁴https://www150.statcan.gc.ca/n1/daily-quotidien/230707/dq230707a-eng.htm