Rising geopolitical tensions following strikes by the United States and Israel on Iran, and Iran’s retaliatory attacks across the Middle East, are creating ripple effects across the global economy. The fallout has already been felt through disrupted travel, increasing oil prices and volatility in financial markets, raising concerns about broader economic consequences.
The conflict may also influence borrowing costs in Canada. Investor concerns about inflation have pushed bond yields higher and reduced expectations that the Bank of Canada will cut its policy rate this year. Because fixed mortgage rates are tied to bond yields and variable rates often follow the central bank’s policy rate, these developments could limit hopes for lower mortgage rates.
