The next Canadian interest rate hike may have just been pushed back all the way to next spring

Three interest rate hikes in 2019 — that’s what economists have been predicting for months, as part of the Bank of Canada’s ongoing strategy to keep the country’s inflation levels in check. But, according to one economist, that plan may have changed.

The BoC held the overnight rate at 1.75 percent and released a statement that Brian DePratto, a senior economist at TD, believes hints that the next hike may not come until next spring.

“We no longer expect the Bank of Canada to hike its policy interest rate in January,” he writes, in a recent note examining the BoC’s decision. “Spring 2019 now appears to be the more likely timing, allowing for the Bank to ensure that the growth narrative is back on track.”

Higher interest rates lead to higher mortgage rates, and add to deteriorating affordability conditions in an already pricey housing market. If the Bank does decide to wait til spring to hike rates, it could be a breath of relief for many current and would-be homeowners, and might lead to slightly higher levels of housing activity in the new year.

But not everyone agrees — Derek Holt, VP and head of Capital Market Economics at Scotiabank, says that while the BoC does seem more cautious in its most recent statement, he maintains that a hike earlier in 2019 is still on the table.

“The door is left open to revisit the more cautious stance in 2019,” he writes, in his most recent note on the subject.

Meanwhile, Benjamin Reitzes, Canadian rates and macro strategist at BMO, puts the odds of a rate hike in January at 50 percent.

“While the Bank reiterated its desire to get policy rates to neutral, the path to neutral is clearly more uncertain than just a couple of months ago,” he writes, in his most recent note. “Looking ahead to January, the BoC will likely need to be convinced to hike (rather than not).”

Sarah Niedoba