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Last week, the Trump administration announced plans to introduce global tariffs on steel and aluminium. The news came in the midst of ongoing — and difficult — negotiations to save NAFTA. But what does all this political turmoil mean for the Canadian housing market?

Well, for one thing, it seems unlikely that interest rates will go up any time soon. The Bank of Canada will decide whether or not to hike the overnight rate this Wednesday.

The overnight rate affects mortgage rates — when it goes up, so do they. Many industry watchers have noted that higher interest rates could continue to cool the Canadian housing market this year. But, with so much uncertainty around what Trump will do next, it seems unlikely that the Bank will continue to hike rates in the next few months.

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“The Bank of Canada has a role to play at this time,” writes CIBC senior economist Avery Shenfeld, in a recent note. “It can, and should, ease back on the timetable for additional rate hikes given the impending threat to both exports and capital spending.”

Shenfeld predicts that the Bank will wait until at least early summer to continue raising rates, given that the Canadian economy has already started to slow in recent months.

“Weakness in net trade already contributed to a much slower pace of growth in the latter half of 2017,” he writes. “Look for the central bank to leave rates unchanged, and mention trade uncertainties as they stall for time in the week ahead’s interest rate announcement.”

According to Scotiabank VP and head of capital market economics Derek Holt, the overnight rate is just one of the factors affecting the Canadian housing market this year.

“Rate pressures are only one consideration in gauging how the spring housing market may hold up, or not,” he writes, in a recent note. “The other is the uncertain effect of stress testing introduced to the uninsured mortgage book at the start of the year.”

Holt writes that the Bank will have to weigh how much the new mortgage rules and higher interest rate environment has affected the Canadian housing market before deciding to hike rates further — something he doesn’t think it will be able to do until the spring.

“The BoC will be speaking with banks through senior levels and desks to evaluate mortgage pre-approvals into the key season and won’t have enough material information in this regard until at least the April meeting,” he writes.

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