Today, the Bank of Canada announced their decision to hold the policy rate for the sixth time this year. This means the Prime Rate should remain at 4.45%. 

As a reminder, the Prime Rate directly impacts those who hold variable or adjustable rate mortgages, as well as those with secured or unsecured lines of credit. 

Those with fixed rate mortgages (or rate holds) are unaffected by this announcement. 

Given the recent news headlines surrounding our neighbours to the south, this may come as a bit of a surprise. Yes, there has been plenty of discussion about the incoming increase to tariffs as well as the continued volatility with the price of oil. The concern lies primarily with how these economic factors will impact the inflation rate in Canada. The Bank of Canada’s goal is to bring inflation back to the 2% target. While oil and gas prices are a significant driver for this target, the Bank of Canada is still forecasting inflation to average around 2% in 2027/2028. As of August 17th, inflation was sitting at 3% for July, however excluding gasoline, core inflation measures remain closer to 2%. Strengthened economic activity in Q2, an increase in housing activity, and a lower unemployment rate, having ticked down to 6.4% in July, were all contributing factors to the Bank of Canada’s decision to hold.

What Does This Mean?

While the broader economy might not be showing signs of higher energy prices spreading to other components of inflation, that's not to say many families aren't feeling like money is tighter than it should be these days. We want everyone to know we're here for any questions. For example, if credit cards are no longer being paid off in full on a monthly basis, maybe there’s an opportunity to discuss consolidating some of that debt into a manageable monthly payment with your mortgage. If kids' activities are more expensive than you were anticipating, perhaps withdrawing some equity from the family home would help make expenses fall into place more comfortably. Please feel free to reach out and we will do our best to find a strategy that works to make the day to day a little easier.

Our team understands there may be more questions and concerns among our clients. We want everyone to know that we’re here to help. We will keep you updated as we receive more information on this.

In the meantime, please see below for some helpful links:

• FULL BANK OF CANADA RATE ANNOUNCEMENT

• DOWNLOAD OUR APP TO RUN VARIOUS SCENARIOS FOR YOUR OWN SITUATION

• BOOK A CHAT WITH OUR TEAM
  

 

Information note

The next Bank of Canada announcement will be October 28th - there will also be a Monetary Policy Report update during this meeting.