The Bank of Canada threw in a few surprises into what most thought would be a predictable interest rate hold yesterday.

The decision to keep interest rates at 5 per cent was widely expected, but the big change in the policy statement was the dropping of the hiking bias, say economists.

“The Bank of Canada isn’t ready, willing or able to bring interest rate relief just yet, but dangled some hints that lower rates are on the way later this year,” wrote CIBC chief economist  Avery Shenfeld.

The statement dropped the line that the Bank “remains prepared to raise the policy rate further if needed,” seen in previous decisions, instead saying they remained concerned about sticky core inflation.

But what really caught observers’ attention was when Bank governor Tiff Macklem said during the news conference that the “governing council’s discussion of monetary policy is shifting from whether our policy rate is restrictive enough to restore price stability to how long to stay at the current level.”

As mortgage analyst Robert McLister put it: “The Bank of Canada didn’t just put rate hikes on the back burner today; it unplugged the stove.”

Another thing worth noting is the Bank’s acknowledgement that shelter costs — mortgage interest and rents — are playing an oversized role in driving inflation and its role in pushing up both.

“Increases in interest rates support rental price inflation by reducing the affordability of housing, which keeps households in the rental market for longer,” it said in the monetary policy report. “Interest rate increases also lead to higher debt costs for property owners, which can be passed on to tenants.”

Capital Economics’ Stephen Brown said that new focus suggests that the Bank is willing to start looking through those components in its inflation assessment.

What came across yesterday was a central bank still worried about inflation but not blind to the risks to the economy of keeping rates high for too long, said CIBC’s Shenfeld.

“That still means that Canadians will have to live through some economic disappointments in upcoming quarters, with the Bank not in a hurry to trigger an upsurge in growth until it gets a bit more comfortable with the underlying pace of inflation,” he wrote.

So how long will Canadians have to wait?

“We need to give these higher rates time to do their work,” Macklem said Wednesday.

How much time remained up in the air as the governor declined to nail down a timeline during questions, saying “I worry that putting it on a calendar, it’s a false sense of precision.”

Markets and many economists think the first cut will come in four to six months.

“But, historically, rates have plateaued at peak levels for anywhere from a few months to 17 months. So far, it’s been six months since the last hike,” said McLister.

Though the Bank did not completely rule out another rate hike Wednesday, “it’s very rare for the Bank of Canada to hike a lot, pause 5+ months, hike more, pause 5+ months more, and then hike again,” he said.

The wait for rate relief will be painful for many debt-laden Canadians.

“Anyone with a variable-rate mortgage or HELOC will be disappointed that there were no hints as to when they can expect the first rate cut,” James Laird, co-CEO of Ratehub.ca and president of CanWise mortgage lender, said after the decision.

Bond yields, which influence fixed mortgage rates, have risen after December’s higher inflation reading, he said.

“Some mortgage lenders have held off increasing their fixed rates in order to see what the Bank of Canada was going to say,” he said. “Lenders will consider moving fixed rates higher since there is no new information from the Bank.”

Others worry about the economy.

A recent survey by the Chartered Professional Accountants Canada found that 90 per cent of Canadian business leaders believe interest rates are having a negative impact on the economy.

Seventy-one per cent said rates are negatively impacting their company.

“Our Q4 Business Monitor survey results suggest that regardless of whether or not we are in a technical recession, the perception among top business leaders is of worsening conditions for the Canadian economy,” says Rosemary McGuire of CPA Canada.

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Ottawa slapped a cap on the number of international students coming into Canada this week, amid growing concerns about the country’s massive population growth.

The number of foreign student visas has tripled in a decade to more than one million, and the two-year cap will cut those numbers to 364,000 as year, a 35 per cent reduction from 2023.

BMO senior economist Robert Kavcic, who brings us today’s chart, said the cap could trim half a percentage point off Canada’s population growth of 3.2 per cent.

“While maybe not an overnight game changer, it is at least an admission (finally) that, when it comes to major issues like housing availability and rent inflation, there is indeed a demand curve too. And it’s usually much easier to move,” wrote Kavcic.

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• Goodbye ‘hawkish bias’: Here’s when economists think the Bank of Canada will cut rates
• Retirees have never owned so many equities — and that’s a risk for the market
• 5 reasons why small- and mid-cap companies should get more attention

Retirees have never owned so many equities — and that’s a risk for the market, says Rosenberg Research. The share of U.S. stocks owned by people at or close to retirement age has surged to a record 80 per cent, but retirees don’t have the luxury to buy and hold through a market downturn. If a downturn does materialize, demographically induced selling is a force that could exacerbate the spiral quickly and powerfully. Retirees have never owned so many equities — and that’s a risk for the market

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Today’s Posthaste was written by Pamela Heaven, @pamheaven, with additional reporting from The Canadian Press, Thomson Reuters and Bloomberg.

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