This morning, the Bank of Canada made their third announcement of 2025 and has decided to hold their policy rate steady at 2.75%. This means, the Prime Rate should remain at 4.95%. 

As indicated in our previous announcements, the Prime Rate directly impacts those who hold variable or adjustable rate mortgages and those who have secured or unsecured lines of credit. These rate announcements do not have a direct correlation to fixed rate mortgages as fixed rates are priced against the bond market. If you are unsure if you are impacted by this announcement, please reach out or book a time to chat HERE!

While the rate itself hasn't changed, the Bank of Canada's messaging was clear - the global economy remains in murky waters and Canada isn't immune. To no one's surprise, at the heart of the uncertainty is the most recent shift in US Trade Policy. The ongoing threat and implementation of tariffs and general unpredictability from Canada's largest trading partner has shaken markets. This has lead to a near inability to implement market predictions and most predications now consist of a vast number of scenarios with contingency plans from A to Z. 

While this is a bit of a hyperbole, it's not far from the truth. In the Bank of Canada's second Monetary Policy Report, they have laid out two possible scenarios (we're sure with many 'what if's') for how things could play out in the economy:

• In the more optimistic case, tariffs remain relatively limited, and Canada’s economy experiences only a temporary slowdown with inflation staying close to the 2% target.
  
• In a more severe scenario, a prolonged trade war could push Canada into a recession this year, with inflation spiking above 3% next year due to rising costs.
  

So, what's next for Canadians? As the Bank of Canada reiterated from the March meeting, "Monetary policy cannot offset the impacts of a trade war. What it can and must do is ensure that higher prices do not lead to ongoing inflation." The Bank of Canada's mandate is to protect and maintain inflation. That's why keeping a keen eye on inflationary pressure, like tariffs, is so important. It's clear the Bank of Canada has concern over how the current economic environment will impact inflation in Canada, and is adopting a cautionary response. The Bank of Canada hasn't ruled out future rate cuts; they've simply hit the pause button while things play out with regards to inflationary pressures. Canadian's will have to take on the wait and see approach as well.

We understand there may still be many questions and concerns amongst our clients and partners. As part of our commitment to providing the most up to date information and comprehensive support, we have recently launched our very own Canadian Mortgage App. Interested in potentially refinancing to make your monthly payments more comfortable? Click HERE to download the app and run various scenarios to see what the best fit may be. 

BANK OF CANADA FULL ANNOUNCEMENT

APRIL'S MONETARY POLICY REPORT

Information Note

As always, we are here to help. If you'd like to chat about your scenario and see what options may be available for you, let us know! We will keep you updated as we receive more information about today's announcement. The next announcement is scheduled to take place on April 16th, 2025.

OAC, E&O