Finance Minister Eric Girard still does not fear a recession, despite persistent inflation and the helm given by the Bank of Canada on Wednesday. For the first time since 1998, the organization raised its key rate by 1%.
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“The most likely scenario, as set out by the Bank of Canada, remains a significant slowdown in growth in 2023 without a recession,” argued the office of the Minister of Finance.
By setting its key rate at 2.5% with a fourth increase since last March, the Bank of Canada’s objective is precisely to limit the effects of inflation, including the meteoric rise in real estate prices.
“The increase in the key rate aims to reduce overall demand, in particular by moderating the effervescence of the real estate market,” recalled Mr. Girard’s cabinet.
First time buyers
However, the direct effect of this increase will be a substantial increase in commercial bank interest rates.
This will make it harder for those who have taken out mortgages to pay their bills at the end of the month, and for first-time buyers to have a harder time getting a loan.
Faced with these concerns, the office of the Minister of Finance recalls that the government has “already implemented several measures to protect first-time buyers and promote access to property”, such as the harmonization of its programs intended for buyers of a first property to federal government programs.
Last June, Quebec also improved the tax credit provided for the purchase of a first home, increasing it from $750 to a maximum amount of $1,500.