The Bank of Canada announced today that it’s holding its key interest rate at 2.75%, meaning there’s no change to variable mortgage rates for now.
This decision comes at a time when inflation is still a concern, even though the overall cost of living (CPI) dropped slightly to 1.7%. The core inflation rate (which strips out things like food and gas) actually rose a little in April, and that’s making the Bank cautious.
They don’t want to repeat what happened in 2022—when rates were cut too soon, inflation came back hard, and everything from groceries to gas shot up in price.
So what’s going on in the background?
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Canada’s economy grew faster than expected (2.2%) this year, helped by a rush of U.S. orders before new tariffs took effect.
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The U.S. has slapped heavy tariffs on Canadian imports, and that’s adding uncertainty to Canada’s economic outlook.
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Global experts (like the OECD) now expect Canada’s economy to slow down later this year and next.
That’s why most economists still believe rate cuts are coming, possibly before the end of the year. Some are predicting the rate could drop to as low as 2% in 2025.
📅 The next interest rate decision is set for July 30, when the Bank will also share its full report on how they see things playing out.
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