June 4th, 2025
The Bank of Canada held its benchmark interest rate steady at 2.75% for the second consecutive meeting, as policymakers grapple with the economic fog created by ongoing U.S. trade tensions and sticky inflation.
While the hold was widely expected, it still leaves many mortgage holders and real estate professionals frustrated. The Canadian Mortgage Brokers Association – BC summed it up best: caution may be prudent, but it’s not providing relief. With affordability stretched and real estate demand stalling, a rate cut could’ve offered some much-needed breathing room for borrowers.
So, why the hold?
Governor Tiff Macklem made it clear: “Uncertainty remains high.” While the economy posted better-than-expected Q1 growth at 2.2%, much of that came from businesses rushing to frontload exports before new U.S. tariffs kicked in — a temporary lift, not a long-term trend. The labour market has weakened, unemployment is up to 6.9%, and housing activity has cooled. Consumption is also losing steam.
On the inflation front, headline CPI dipped to 1.7% in April, largely due to the removal of the federal carbon tax. But dig deeper, and the picture changes: core inflation rose to 2.3%, with business surveys pointing to further price hikes as tariffs bite. The Bank acknowledged this “unexpected firmness” in inflation, which gives them reason to pause before easing further.
And then there’s trade. U.S. tariffs — some now as high as 50% — have introduced significant volatility. While negotiations have softened some of the worst-case fears, nothing has been resolved. The Bank is opting for a cautious, data-dependent approach while they “gain more information.”
Still, most economists agree that rate cuts are likely coming — possibly as soon as the July 30 announcement. The OECD forecasts Canada’s growth slowing to just 1% this year, with inflation pressures expected to fade as economic momentum stalls. Even the Bank of Canada hinted that there’s room to cut if trade tensions drag on and demand continues to soften.
For now, variable-rate mortgage holders won’t see a change, with prime holding steady at 4.95%. But fixed rates, already elevated due to surging bond yields tied to global uncertainty, remain a pain point for borrowers.
Bottom line: the Bank is trying to thread a needle — holding off inflation without pushing the economy into recession. But with consumer confidence down, housing investment lagging, and trade risks unresolved, the pressure to act may soon be too strong to ignore.
April 16th, 2025
The Bank of Canada held its overnight rate at 2.75%, ending a streak of seven consecutive cuts.
While the pause wasn’t unexpected, it’s not necessarily permanent. Uncertainty surrounding escalating U.S. tariffs has left the Bank in wait-and-see mode, unwilling to commit to a clear path forward.
The central bank emphasized just how murky the outlook has become, scrapping its usual economic forecast in favour of two scenarios: one with a moderate rebound and one with a deep recession triggered by a global trade war. Both options highlight the challenge policymakers face—balancing weakening domestic demand with the potential inflationary impact of tariffs.
Bank of Canada Governor Tiff Macklem called the current environment a “seismic shift in U.S. trade policy,” admitting that recent developments make it unusually difficult to predict inflation or GDP growth. Inflation came in at 2.3% in March—lower than February but still elevated from earlier in the year. That figure is expected to drift lower in the coming months as carbon tax removals and falling oil prices work their way through the system.
Still, risks are rising. Canadian employment fell in March, business investment is slowing, and consumer spending is soft. Economists at RBC, CIBC, TD, and BMO now largely agree that more rate cuts are likely—most are pointing to June as the next move. But how deep those cuts go will depend on how the trade story evolves.
With inflation and growth pulling in opposite directions, the Bank’s job isn’t getting any easier. But one thing is clear: if economic conditions worsen, rate cuts will be back on the table—likely sooner than later.
March 12th, 2025
The Bank of Canada (BoC) has cut its benchmark interest rate by 25 basis points to 2.75%, marking the seventh consecutive reduction since mid-2024.
This decision comes amid growing economic uncertainty, primarily due to U.S.-imposed tariffs and potential trade conflicts. The move is aimed at mitigating financial pressures on Canadians, particularly mortgage holders and homebuyers.
Economic Justification
Canada’s economic growth showed resilience in late 2024 but is now expected to slow due to trade tensions with the U.S. Inflation remains close to the BoC’s 2% target, but the end of temporary tax breaks is expected to push inflation to 2.5% by March. Business and consumer confidence have been shaken, causing a drop in spending and investment.
Impact on Homeowners and Buyers
Lower rates will reduce borrowing costs, making variable-rate mortgages and Home Equity Lines of Credit (HELOCs) more affordable. Increased affordability could drive demand in the housing market, potentially raising home prices.
Fixed-rate mortgage holders may not see an immediate impact, but bond yields may adjust over time lowering rates.
What’s Next?
More rate cuts could follow in 2025 if economic conditions deteriorate. Some analysts predict the BoC’s rate could fall to 2.25% by mid-year. The BoC acknowledges that while monetary policy can help cushion the impact of trade disruptions, it cannot fully offset them.
January 29th, 2025
A new year starts with a rate reduction!
The Bank of Canada Cuts Rates Again – But Trade War Risks Loom Large
The Bank of Canada (BoC) has lowered its benchmark rate by 25 basis points to 3.00%, marking the sixth consecutive rate cut amid signs of slowing economic growth and moderating inflation. While inflation remains near the central bank’s 2% target, concerns over a potential trade war with the U.S. have clouded the economic outlook.
The biggest wildcard? U.S. President Donald Trump’s threat to impose a 25% tariff on all Canadian imports, which could take effect as early as February 1. If enacted, these tariffs would significantly disrupt trade, potentially pushing Canada into a recession while also driving up inflation due to higher import costs.
The BoC has modeled several scenarios, with estimates suggesting that a full-blown trade conflict could shave up to 3 percentage points off GDP growth in the first year. In response, the Bank may be forced to cut rates more aggressively throughout 2025, possibly lowering the benchmark rate to 2.25% or lower before year-end.
What This Means for Real Estate and Borrowers
With rates dropping further, homebuyers gain more purchasing power, likely fueling demand and putting upward pressure on home prices. If you’re considering buying, refinancing, or selling, now is a crucial time to assess your options.
The BoC has signaled it will continue adjusting rates as needed to keep the economy stable, but a prolonged trade war could change the game completely.
Bank of Canada Interest Rate Announcement Dates / 加拿大央行利率公佈日期
- January 29 -0.25
- March 12 -0.25
- April 16 +0.00
- June 4 + 0.00
- July 30
- September 17
- October 29
- December 10
If you are interested in selling or purchasing a property, please contact Matt Gul, one of West Vancouver's top Realtors at 778-888-8888, for Mortgage Advice, please contact Dave Bruynesteyn at 604-315-3283 and mention that you've been referred by Matt Gul.
***For Previous Bank of Canada Interest Rate Announcements, Please Click Here***