OTTAWA — For the Bank of Canada these days, it’s all about timing.

The central bank stuck with its benchmark interest rate of 1.25 per cent Wednesday as it continued along a careful process of determining the appropriate juncture for its next hike.

“Governing council has agreed that, over time, the economy would appear to be warranting higher interest rates — our uncertainty is about how much and at what pace,” governor Stephen Poloz told a news conference that followed his latest rate announcement.

“For us, the case is clear — interest rates are very low considering that the economy is pretty well at capacity, inflation’s at two per cent.

The latest rate decision comes at a time of moderating growth following a strong 2017. Inflation is also running close to its ideal target and wage growth has strengthened with a tightening labour force.

Poloz, however, said that despite the recent improvements, the economy’s still unable to continue running at full tilt without the stimulative power of lower rates, at least for a little longer.

He listed four downward forces still weighing on the economy — all of which have come under close scrutiny by a central bank that has been describing itself as data dependent.

Two of these sources of uncertainty — inflation and wage growth — were highlighted as areas showing particular progress.

On inflation, Poloz said recent readings have been “very reassuring” with both the headline and core rates near its two per cent bull’s-eye.

Wage growth, he said, has increased significantly over the last 18 months to reach the three per cent range, although the bank noted the measure remains below what would be expected if the economy no longer had slack in its labour force.

The bank will also continue to watch two other areas of uncertainty: the economy’s sensitivity to higher interest rates and how well it builds capacity through business investment.

On capacity building, Poloz said he believes Canada now has a little more room to expand further, beyond what the bank sees as the economy’s potential growth — and all without driving up inflation.

When it comes to the impact of higher rates, Poloz said even with the inflated debt loads of Canadian households, recent data has shown moderation in credit growth.

Poloz reiterated Wednesday the bank would remain cautious when it comes to future increases.

Following the rate announcement, many experts stuck with their calls that the bank will introduce its next hike in July.

Poloz has raised rates three times since last summer following an impressive economic run for Canada that began in late 2016, but his last hike came in January.

Throughout this period, the bank has also kept a close watch on the evolution of external risks.

Exports and business investment in Canada have been held back by competitiveness challenges and trade-policy uncertainties, which include escalating geopolitical conflicts that risk damaging global expansion, the bank said.

It laid out estimates on the growth impacts on Canada due to tax reforms in the United States, which are expected to lure more investment south of the border. Due to these investment challenges, it predicts Canada’s gross domestic product to be 0.2 per cent lower by the end of 2020.

Exports are also expected to take a hit from trade uncertainties and reduced investment. The bank projects that Canada’s GDP will be 0.3 per cent lower by the end of 2020 due to the negative impacts on exports.

Fiscal stimulus introduced in recent provincial budgets is expected to help offset these effects by adding about 0.4 per cent to Canada’s real GDP by the end of 2020.

On Wednesday, the bank also posted new economic forecasts with the release of its latest monetary policy report.

For 2018, it’s now predicting two per cent growth, as measured by real gross domestic product, compared to its 2.2 per cent prediction in January.

That rate represents a drop from the three per cent growth in 2017. The bank had been anticipating such moderation.

However, the bank also raised its growth projection for 2019 to 2.1 per cent, up from its previous prediction of 1.6 per cent. It expects growth to ease to 1.8 per cent in 2020.

For the first three months of 2018, the bank is predicting growth of about 1.3 per cent — considerably lower than its January projection of 2.5 per cent.

The effects of sluggish exports and the housing markets’ responses to stricter mortgage rules played a big role in the disappointing numbers, the bank said.

It’s now predicting, however, the economy will rebound in the second quarter with 2.5 per cent growth, in part because of rising foreign demand.

A recent study elucidated how badly homeowners got burned when Toronto’s housing market plunged about a year ago.

The report, published by Move Smartly, determined that hundreds of homeowners lost an average of $140,000 because of closing defaults, and according to John Pasalis of Realosophy, that totaled $121mln in lost market value.

“It tells you how rapid the decline was,” Pasalis told the Globe and Mail. “It tells you how quickly markets turn.”

Closing defaults often result in litigation, but that becomes even trickier when the purchaser who reneges on the transaction lives in another country.

“One client sold to a buyer from Iran, who was buying as a non-resident, and decided he’s not closing on the deal, and then what’s the recourse of the client—you’re going to sue someone in Iran?” said Mortgage Outlet’s Principal Broker Shawn Stillman. “Some people will simply not close because they don’t want to buy something that’s worth $200,000.”

On preconstruction purchases, Stillman recommends to all his clients that they take the on-site mortgage broker’s preapproval. While the terms might not be favourable, it mitigates the chances of defaulting on closing.

“One thing we always recommend people do is the builders always offer a preapproval for a set amount of time and we tell them to take it,” he said. “It’s something we can’t offer in the mortgage world. There’s always a mortgage broker from a major bank on site that usually does financing that will preapprove you for a few years. It’s a terrible rate but I always tell clients, ‘You don’t know what the future holds,’ and to always take that preapproval because that would be the worst case scenario.”

Unfortunately, through no fault of their own, sellers end up being the real losers. Because they sell their home on condition and buy another to move into only for their buyer to back out, they’re stuck between a rock and a hard place.

“Unfortunately, it’s not anybody else’s responsibility to help [the defaulting buyer] get out of that hole,” said Stillman. “When things went up in value, builders weren’t saying ‘You have to pay me 20% more, or a $100,000 more.’ Same thing when prices go down. It’s nobody’s responsibility but theirs to close the deal.”

Canada’s banking industry is facing increased competition from growth in the fintech sector as mortgage demand weakens according to a new report.

The Conference Board of Canada says that despite these challenges, banks will manage to increase their pre-tax profits to more than $95 billion in 2018 and will see output grow by an average of 2.6% annually through 2022.

“The impact of financial technology firms on the industry is growing, and to date this has been primarily beneficial to the industry. Productivity continues to increase considerably and has been a key driver behind its successful financial performance,” said Michael Burt, Director, Industrial Economic Trends, The Conference Board of Canada.

The banking sector has responded to fintech disruption by expanding their own digital offerings, but the other challenge they face will be hard to mitigate.

The report says that demand for mortgages will drop “considerably” as interest rates rise and more stringent mortgage regulations weigh. This, along with lower demand for other consumer loans will weigh on banks’ profitability.

Statistics Canada announced this morning that employment increased by a stronger-than-expected 32,300 in March, driven by full-time job gains. The unemployment rate was unchanged at a four-decade low of 5.8% indicating that the economy is at or near full employment.

In the first quarter of 2018, employment edged down (-40,000 or -0.2%) reflecting a decrease in January. On a longer-term basis, jobs have been on an uptrend since the second half of 2016 despite a price-induced weakening in the oil sector. Over the past year, total employment rose by nearly 300,000 (+1.6%), driven by a surge in full-time work and a net decline in part-time jobs–all excellent news for the economy. Over the same period, total hours worked grew by 2.2%.

Employment rose in Quebec and Saskatchewan, while there was little change in the rest of the country. As the table below shows, British Columbia continues to post the lowest jobless rate in Canada at a stable 4.7% followed by Ontario at 5.5%. Quebec is third with an unemployment rate only slightly above the level in Ontario, its best relative performance in many years. The jobless rate at 5.8% in Saskatchewan edged up last month as it did in Manitoba. Alberta saw a sharp improvement as the jobless rate fell from 6.7% to 6.3% continuing the trend of recent months. Atlantic Canada continued to post the highest proportion of unemployed people. While the unemployment rate edged down in Nova Scotia and New Brunswick, it rose in Prince Edward Island and Newfoundland and Labrador.

From an industry perspective, job gains were led by the construction sector (+18,300), representing more than half of the employment growth last month. This was the most robust performance for construction jobs since February of 2016. Compared with 12 months earlier, employment in this sector grew by 54,000 (+3.8%), mostly resulting from gains in the second half of last year. There were also gains in public administration and agriculture. The number of public sector employees rose, while the number in the private sector and those self-employed held steady. The number of people working in finance, insurance, real estate and leasing ticked down slightly last month while it declined -0.4% on a year-over-year basis. Manufacturing was a drag on the economy, with the sector losing 8,300 jobs in March, possibly reflecting NAFTA uncertainty.

Another piece of good news for Canadians is that annual wage gains averaged a sizeable 3.2% in the first quarter of this year, the most substantial quarterly rise since 2015.

The March jobs report reaffirms that the Canadian economy is very close to full employment with little slack left following Canada’s strong economic performance last year. “Normal” levels of monthly job growth are about 15,000 to 20,000.

Wages have been showing signs of strength in recent months as labour markets have tightened. Annual pay increases accelerated to 3.3% in March from 3.1% in February.

The Bank of Canada has much to weigh at its policy meeting on April 18. Growing optimism that a preliminary NAFTA deal is within reach has not yet triggered expectations for faster Bank of Canada interest rate hikes, particularly with rising U.S.-China trade tensions. Investors now wager there is about a 20% chance of an interest rate hike at the April 18 meeting, based on swaps trading, down from 40% two weeks ago. A BoC interest rate rise is not fully priced in until July.

Even if a tentative NAFTA deal is signed, the central bank would likely wait to see concrete increases in Canadian exports, business investment and inflationary pressure before moving again after three rate increases since last July. The February trade figures released this week were disappointing, particularly for non-energy exports. Railway delays led to a record drop in food exports. Canada has reported trade deficits since January 2017, amplifying concerns about a decline in competitiveness.

Before its April confab, the Bank will also analyze its own survey of business executives released this Monday to see how executives have responded to trade uncertainty and tight labour markets. The Bank of Canada’s business outlook indicators have been on a steady uptrend since the lows reached in 2015 and are hovering at some of the highest postings in the past 17 years. It will be interesting to see if enlarged global trade tensions have dampened business optimism in Canada.

The housing measures set out in the Quebec provincial budget have been given the thumbs up by a local real estate board.

The Greater Montreal Real Estate Board says that all of the real estate and housing measures tabled by the finance minister are positive, especially those relating to homeownership.

Among the province’s proposals are a non-refundable tax credit for eligible first-time buyers which when combined with the federal tax credit could mean $1,376 in tax relief after buying their first home.

First-timers will also be able to take advantage of a tax deduction of $5,000 to help defray the costs of incidental expenses not covered by a mortgage, such as inspection fees, property transfer taxes, notary fees and moving expenses.

For those renovating their home, the RenoVert refundable tax credit will be extended, providing assistance equivalent to 20% of eligible renovation costs above $2,500.

The government has also pledged to invest $103.9 million in affordable housing.

Foreign buyers of real estate in Quebec are putting “marginal” pressure on prices while still accounting for a tiny sliver of the market relative to Vancouver and Toronto, according to new data released by the French-speaking province.

Non-Canadian residents generated 1,307 property transactions in Quebec last year, representing 1 percent of all deals, finance ministry documents show. That’s little changed from 2008, when they made up 0.8 percent of the total. Foreigners mostly purchased high-end properties, averaging C$559,000 ($434,343) apiece, the finance ministry said Tuesday.

U.S.-based buyers made up the biggest share of foreign acquirers with 32 percent of all transactions. French buyers were next with 20 percent, followed by Chinese nationals at 16 percent. That’s a marked contrast from 2006, when Chinese residents accounted for just 1.3 percent of all foreign home transactions in Quebec.

Quebec recently began tracking and releasing data on the country of residence of home buyers following a decision by Ontario and British Columbia to impose taxes on foreign buyers.

“When we look at average prices in the Montreal area, compared to other places in Canada, they are still relatively affordable,” Quebec Finance Minister Carlos Leitao said Tuesday in Quebec City. “I don’t think we are at all in the same type of position as our neighbors in Toronto or Vancouver. There is no need, in our view, to consider any sort of more intense measures.”

Last year’s land-registry data — compiled by JLR Solutions Foncieres — show foreign buyers bought single-family homes that were twice as expensive on average as those acquired by Quebec residents, the finance ministry said. Co-ownership properties acquired by foreigners were 40 percent more expensive than those bought by Quebeckers, the ministry also said.

Foreigners accounted for just 1.4 percent of housing deals in Montreal last year, compared with 3.2 percent in Toronto and 3.5 percent in Vancouver, according to budget documents.