In a widely expected move, the Bank of Canada has decided to hold its key interest rate at 2.75%, signaling cautious optimism about the country’s economic resilience amid global trade tensions and tariffs.Governor Tiff Macklem emphasized that while the threat of a worsening trade war lingers, recent deals between the U.S., Japan, and the EU have somewhat reduced the risk of an all-out global trade collapse. That said, the U.S. shows no sign of returning to fully open trade, and tariffs—especially those impacting Canadian exports—continue to cloud the country’s economic outlook.
Canada's Economic Forecast: Mixed but Stable
The Bank’s monetary policy report outlines three potential trade scenarios (status quo, de-escalation, and escalation). Even in the base-case outlook, tariffs remain at around 7–8%, up significantly since the start of the year. Despite this, the Canadian economy is expected to rebound through the end of 2025, following a 1.5% drop in real GDP last quarter.The Bank made it clear: it’s not yet time to lower rates. Inflation remains sticky, and there’s still pressure from import costs being passed down to consumers. For now, the central bank is prioritizing stability over stimulus.
What Does This Mean for Homebuyers? 🏡
If you’re planning to buy a home in 2025, this pause in interest rate changes is actually good news. A steady lending rate gives clarity and predictability for mortgage planning. While today's mortgage rates remain higher than pre-2022 levels, the fact that rates are not rising further allows first-time homebuyers to set more realistic expectations around affordability.Moreover, the Bank’s cautious tone means a potential rate cut could still come later this year—especially if inflation softens or trade tensions ease. That means today’s buyers may lock in at a fixed rate and still benefit if variable rates trend downward in 2026.
What Should Sellers Keep in Mind? 🏘️
For sellers, stability in rates helps sustain buyer interest, especially in urban areas like Toronto, Mississauga, and the GTA. The pause reduces the urgency buyers might feel to “wait and see” if borrowing costs drop. In other words, serious buyers remain active, particularly in popular price segments under $1M where demand continues to outpace inventory.If you're considering listing your property, now may be a smart window before any new trade shocks or inflation spikes impact consumer confidence.The Bottom Line
While the Bank of Canada’s rate hold wasn’t a surprise, it does offer some breathing room for households making major financial decisions. As we move into the final quarter of 2025, all eyes remain on inflation, global trade negotiations, and economic growth.Whether you're planning to buy, sell, or refinance, this moment is about strategy and timing. Our real estate team can help you navigate what these economic shifts mean for your specific goals.Ready to talk about your next move? Let’s connect.
