This morning, the Bank of Canada made their fifth announcement of 2025 and, for the third consecutive time, 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, as well as those with 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're unsure whether you're impacted by this announcement, please reach out or book a time to chat HERE.

In addition to the rate announcement, the Bank of Canada released their July Monetary Policy Report. While many can guess what's prompting such a cautious approach, the fact that the report mentions “uncertainty” 79 times and “tariff” 273 times really drives the point home.

The economic future for Canada, and much of the world, is clouded. Global trade conflicts are still unfolding, and with another supposed deadline looming on August 1st, the potential for negative developments is high. Unfortunately, if the ongoing cycle of “tariff on, tariff off” continues, there's a strong chance the Bank of Canada’s cautious stance will continue in parallel.

The Bank of Canada has outlined three potential scenarios:

• Current Tariff Levels – GDP contracts slightly in Q2, then rebounds modestly to reach ~1.8% by 2027. Inflation hovers around 2%.

• Tariff De-escalation – A reduction in tariffs could spark ~2% growth in late 2025, with inflation dipping before stabilizing near 2% by 2027.

• Tariff Escalation – New tariffs drag economic growth down in 2025, with inflation peaking above 2.5% in mid-2026 before easing back to target.

What does this mean right now? Well, if you're one of the many Canadians facing a mortgage renewal or entering a new mortgage, rates aren’t moving… yet. That could change quickly. If you're concerned about what you're being offered at renewal, call us. We can craft a plan that fits your goals and risk tolerance amid the uncertainty.

For our Real Estate partners: Prepare for all possible outcomes. If tariffs drop, expect activity to bubble and strengthen. If tariffs rise, brace for the potential of slower growth.

As we've said before, if anyone tells you they know what's going to happen with the economy or interest rates, they're not being truthful. Even the Chair of the Federal Reserve, Jerome Powell, said on June 24th while presenting to the House Financial Services Committee:

"We do expect to show up — tariff inflation to show up more. But I want to be honest, we really don't know how much of that's going to be passed through to the consumers. We just don't know. And we won't know until we see it. It could be lower than we expect; it could be higher. We have to wait and see, which is kind of what we're doing." (full article)

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 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

JULY'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 September 17th, 2025.

OAC, E&O