This morning, the Bank of Canada made their fourth announcement of 2025 and, for the second 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 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!

Let's talk a bit more about what's going on and what this means...

If we had a nickel for every time 'uncertainty' or 'tariff' has been mentioned in the past 6 months, we'd probably have a few dollars in hand. Which doesn't seem like much, but compared to the last 15 years of our time in the industry, it's a lot. Uncertainty is the trend these days and with that, comes difficulty with economic forecasting and predictions. As a result, the Bank of Canada is taking a careful pause as they watch how the economy digests earlier cuts and navigates this growing (unusual) uncertainty.

"...Governing Council decided to hold the policy rate as we gain more information on US trade policy and its impacts. We will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs."

Here's what we're seeing and why it matters:

INFLATION IS COOLING.....kind of

Headline inflation dipped to 1.7% in April, thanks in part to the end of the federal carbon tax. But core inflation (the piece of the puzzle the BoC really pays attention to) is still hovering above 3%. As such, the mission is not quite accomplished... yet. 

THE ECONOMY HAS A (small) CAFFEINE BUZZ 

GDP grew more than expected in Q1 - 2.2% - but that was mostly due to businesses rushing exports before new tariffs kicked in. We wouldn't consider that sustainable growth.

JOBS ARE STARTING TO WOBBLE 

The unemployment rate has crept up to 6.9%, and trade-heavy sectors are feeling the squeeze. With the US President's Executive Order signed on June 3rd, doubling steel and aluminum tariffs to 50%, we may see this number tick up a bit more as jobs in those sectors are impacted again.

TRADE TENSIONS ARE CLOUDING THE SKIES

Tariff and global uncertainty are continuing to make it harder for the Bank of Canada to chart a clear course. As we've seen, they're holding steady while we weather these fluctuations.

If you're following the 'tariff' and 'uncertainty' counter for this email, we're at a total of 10 times...

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

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 July 30th, 2025.

OAC, E&O