Mortgage rates continue to operate in a fairly narrow range but we've been mostly moving in one direction inside that range so far this month.  Late last week, it was the strong job creation announced on Friday that pushed rates higher.  This week has been less volatile by comparison, but rates remained under pressure to move higher today after the Bank of Canada (BOC) announced a rate hike.

What's the BOC got to do with anything?  After all, I'm normally the first to tell you that mortgage rates don't care about central bank rate hikes by the time they actually happen.  And that's before we even consider that Canada's economic and monetary developments traditionally don't matter too much to the US rate market.

But in this case, the market was about 50/50 as to whether the BOC would hike, so the market couldn't have been in position for a hike or a cut.  The hike offered a sort of proof of concept that a central bank could and would err on the side of higher rates in order to fight inflation.  This concept can then be applied to how the Fed might frame our own situation here in the U.S. when they unveil the latest policy announcement next Wednesday.

Most lenders ended up raising rates in the middle of the day in response to the market movement caused by the BOC announcement.  We'll have to wait until next Wednesday to hear from the Fed, and until next Tuesday to see the Consumer Price Index (CPI)--the only data that has real chance to change the Fed's rate decision.