The Bank of Canada has
once again opted to keep its policy interest rate unchanged at 2.75%,
marking the third consecutive meeting without a rate change. This decision
comes amid ongoing global economic uncertainty, particularly surrounding U.S.
trade policy and the looming threat of new sector-specific tariffs.
In its official
statement, the Bank acknowledged that while U.S. tariffs are disrupting
trade, Canada’s economy has shown resilience in the face of external
challenges. The strong economic growth witnessed in the first quarter of
2025—largely driven by a surge in exports ahead of anticipated tariffs—was
followed by a likely 1.5% contraction in GDP during the second quarter.
“With uncertainty still
elevated, the Canadian economy showing resilience, and ongoing pressures on
underlying inflation, the Governing Council decided to hold the policy interest
rate unchanged,” the Bank noted. “We remain focused on ensuring that Canadians
continue to have confidence in price stability during this period of global
upheaval. We will support economic growth while ensuring inflation remains well
controlled.”
What This Means
for Buyers and Sellers
The Bank’s decision
provides a sense of stability for the housing market heading into late
summer. For variable-rate mortgage holders, this means no immediate
changes to borrowing costs. However, broader economic uncertainty—particularly
around trade and inflation—could continue to influence consumer confidence and
real estate activity in the coming months.
Current Key Rates:
·
Overnight
rate target: 2.75%
·
Bank
rate: 3.00%
·
Deposit
rate: 2.70%
2025 Bank of
Canada Rate Announcement Schedule:
The Bank of Canada will
announce interest rate decisions on the following dates:
·
January
29
·
March
12
·
April
16
·
June 4
·
July
30
·
September
17
·
October
29
·
December
10
Each announcement is
typically made on a Wednesday and is closely watched by financial
markets, economists, and real estate professionals alike.
Looking Ahead
While some clarity is
emerging in U.S. trade policy, negotiations remain fluid, and the
potential for new tariffs persists. As such, the July Monetary Policy Report
(MPR) does not provide traditional base-case projections. Instead, it
explores three potential scenarios:
1. Current Tariff Scenario – based on tariffs in place or agreed upon as of July
27
2. Escalation Scenario – assuming further tariff increases
3. De-escalation Scenario – assuming improved trade relations and reduced
tariffs
In this unpredictable
environment, the Bank of Canada continues to walk a tightrope—balancing the
need for economic growth with its mandate to maintain price
stability.
Stay tuned for future
updates and insights as we monitor how economic and policy developments will
shape the Canadian real estate and financial landscape throughout the rest of
2025.
