The Bank of Canada is maintaining its policy rate steady at five per cent due to stagnant economic growth, which is expected to persist through the first quarter of 2024. This decision is part of a policy of quantitative tightening. The bank attributes the economic slowdown to reduced consumer spending in response to higher prices and interest rates, as well as decreased business investment. Despite expectations for growth to pick up later in the year, the bank remains concerned about inflation, particularly regarding persistent underlying inflation and high shelter costs.

The housing market is also affected by these economic conditions, with high interest rates and strong rent growth making housing less affordable. Despite this, there are forecasts for home price increases in certain regions like Metro Vancouver and Calgary, driven primarily by apartment prices. However, rising lending rates have impacted the housing sector, leading potential buyers to seek more affordable options.

There is anticipation in the market for a potential rebound once consumers gain confidence in the stability of home prices. However, this sentiment suggests that a rate cut by the Bank of Canada may not be the sole factor driving such a rebound. 

Overall, the Bank of Canada is not expected to implement a rate cut before the second quarter, meaning the policy rate will likely remain at five per cent until at least the April 10 rate announcement.