The Bank of Canada (BoC) is set to issue an interest rate update on Wednesday, October 25, at 10 a.m.

This will mark the seventh interest rate announcement of 2023. One last announcement for the year is scheduled for December 6.

In 2022, the BoC hiked its interest rate seven times. Then, in January 2023, another increase followed, bringing the key rate to 4.5 per cent.

The Bank held its key rate at 4.5 per cent, precisely as experts predicted, until June 7, when it was raised to 4.75 per cent. On July 12, the BoC brought the key rate to 5 per cent to relieve inflation and, on September 12, announced that it was holding that rate.

According to Statistics Canada, Canada's inflation rate fell to 3.6 per cent in July and rose to 4 per cent in August before decreasing by 0.2 per cent in September. Consumer spending has remained high this year compared to 2022.

Ratehub.ca co-CEO and president of CanWise mortgage lender James Laird shared his thoughts and expectations for the upcoming BoC announcement.

"It is widely expected that the Bank of Canada will hold rates next week due to last week's lower-than-expected inflation number," he told us in an email. "It is possible that there will be no further rate hikes in 2023."

Laird believes the Bank hopes to be finished with rate hikes and will be "unless they are surprised by future incoming data."

"Forecasting has been notably difficult for the Bank over the last 12 months, given there is still a lot of volatility in the economy," he added.

What should you do?

With a rate hold expected, Laird says anyone with a variable-rate mortgage or home equity line of credit (HELOC) should be cautiously optimistic that there will be no further rate hikes this year.

He advises those shopping for a fixed-rate mortgage to submit a rate hold this week. "Depending on the Bank's policy announcement and commentary next week, bond yields could push up further, which will cause fixed rates to follow," the CEO reasons.

If you're choosing between a fixed rate and a variable rate right now, you should only consider a variable rate if you're open to more risk and are convinced that the Bank is finished or close to finished hiking rates.

"Higher rates are affecting the real estate market," said Laird, noting that the Canadian Real Estate Association (CREA) home price index for September showed values were down in all major markets and listings are building.