The Rate Announcement Schedule
The Bank of Canada publishes an annual schedule of eight fixed dates for policy rate announcements. Announcements take place on Wednesdays at 10 a.m. Eastern Time. This predetermined schedule allows financial markets, lending institutions, and mortgage brokers to plan accordingly. Dates are published on the Bank of Canada website as early as January. For a mortgage broker in Quebec, incorporating these eight dates into their professional calendar is an essential practice. Before each announcement, it is recommended to communicate with clients whose files are being processed and to prepare scenarios for the three possible outcomes: increase, decrease, or hold.
The Press Release and the Monetary Policy Report
Each announcement is accompanied by a Governing Council press release, a text of approximately 500 to 800 words summarizing the decision and its context. Four times per year, the announcement coincides with the publication of the Monetary Policy Report (MPR), a much more detailed document (approximately 30 pages) analyzing the Canadian and global economy, presenting inflation and GDP growth projections, and identifying key risks. The MPR includes tables of numerical projections and charts that help brokers understand the anticipated rate trajectory. The Governor's press conference, which follows each MPR, provides additional détails and allows journalists to ask questions, sometimes revealing important nuances about the Bank's thinking.
How to Interpret the Bank's Tone
- Read the official press release: Pay attention to the language used. Words like 'concerned about inflation,' 'excess demand,' or 'persistent inflationary pressures' suggest a hawkish tone (favouring hikes). Expressions like 'economic slowdown,' 'weaker-than-expected demand,' or 'moderating inflation' indicate a dovish tone (favouring cuts).
- Compare with the previous release: Note wording changes from one announcement to the next. The addition or removal of certain qualifiers is significant. Financial analysts publish word-for-word comparisons (word diffs) that facilitate this analysis. A tone shift, even subtle, can signal a monetary policy pivot.
- Analyze MPR projections: Compare numerical inflation and GDP growth projections to previous ones. An upward inflation revision combined with a downward growth revision may signal a stagflationary environment, particularly complex for borrowers.
- Follow the press conference: The Governor answers journalists' questions after each MPR. Responses, sometimes more direct than the official release, can reveal future directions. Pay attention to questions about the anticipated timeline for upcoming rate moves.
- Monitor futures markets: Interest rate swap markets and bankers' acceptance futures (BAX) reflect market participants' expectations. This data, available on financial platforms, indicates the probability of a hike or cut at upcoming announcements.
Impact on Fixed and Variable Mortgage Rates
Bank of Canada announcements affect fixed and variable rates differently. Variable rates react mechanically: if the Bank raises by 0.25%, the prime rate rises 0.25% within 24 to 48 hours, and the client's variable rate increases accordingly. Fixed rates, however, are determined by the bond market, which reacts to expectations rather than the decision itself. It frequently happens that fixed rates have already moved before the official announcement if the market had correctly anticipated the decision. Paradoxically, a policy rate hike accompanied by a dovish signal (indicating the hiking cycle is nearing its end) can lower long-term bond yields and therefore fixed rates.
Broker Communication Strategy
Announcement days are crucial moments for client relationships. The professional broker should establish a communication protocol: prepare an email or message explaining the decision and its implications before 11 a.m. on announcement day, personally contact clients in the purchasing process or approaching renewal, and publish analysis on professional networks. This proactivity demonstrates the broker's expertise and strengthens client confidence. In Quebec, the AMF requires brokers to act with competence and professionalism; thorough knowledge of Bank of Canada decisions is an integral part of this professional obligation.
Impact on Brokerage Practice in Quebec
Mortgage brokers in Quebec must incorporate the announcement schedule into their annual planning. Before each announcement, verify clients' rate holds, ensure urgent files are submitted, and prepare impact scenarios for qualifications in progress. After the announcement, be ready to quickly answer client questions and adjust recommendations as needed. Periods of rate stability are conducive to file processing, while periods of volatility require more communication and strategic advice.