This morning, the Bank of Canada made their second announcement of 2025. For the seventh consecutive time since June 2024, the Bank of Canada decided to reduce their policy rate; this time, by 0.25%. This reduction will result in Prime Rate now being 4.95%. 

As indicated in our previous announcements, this reduction is welcome news to those who hold variable or adjustable rate mortgages and those who have secured or unsecured lines of credit. This rate cut does 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!

Canada entered 2025 with inflation close to the 2% target and what the Bank of Canada had noted as 'robust GDP growth'; this garnered them to consider Canada's economy in a solid position. Since then, there has been heightened trade tensions that will likely slow the pace of the economy and increase inflationary pressures in Canada. 

The first 10 weeks of this year have felt long and arduous. It is difficult to stay up to date on current events due to both the waterfall like frequency they're announced and the subject matter. As a result, this has contributed to a significant amount of economic uncertainty as illustrated in the stock and bond market readings over the last handful of days. 

This rate adjustment aims to address this ongoing uncertainty while specifically singling out the potential fallout and consequences of US Tariffs. Bank of Canada Governor, Tiff Macklem, has not ruled out the possibility of additional cuts if the economic conditions show need for further easing (i.e. increased inflationary pressures).

One of the many difficulties facing the economy, and the ability to predict outcomes, is the continuously changing narrative. This has greatly impacted consumer confidence and thus their spending intentions. The Bank of Canada was quoted in their update saying, "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."

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. 

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