Thinking a rate cut is around the corner? Don’t hold your breath.
Bank of Canada Governor Tiff Macklem just delivered a reality check. Speaking from St. John’s, Newfoundland, Macklem emphasized that inflation is still too hot for comfort—and until it cools, rate cuts aren’t even on the table.
🔍 What’s Going On?
Despite some economic uncertainty, the Bank of Canada is keeping its key rate at 2.75%. Macklem gave no hints of changing that at the next meeting in late July.
In fact, he suggested inflation may be “firmer than we thought.” Translation? The Bank is staying cautious.
📦 What’s Driving the Concern?
1. Tariffs Are Heating Things Up
The trade tensions between Canada and the U.S. aren’t helping. President Donald Trump’s tariff spree is raising prices and adding fuel to the inflation fire.
“We can’t let a tariff problem become an inflation problem.” – Tiff Macklem
Macklem warned that if people expect prices to keep rising, businesses will feel more confident passing those costs on. That’s bad news for consumers.
2. Sticky Inflation
Core inflation indicators suggest price growth isn’t slowing as quickly as expected. If Canadians come to expect higher prices, it could lead to a cycle of ongoing price hikes.
3. Jobs Still Strong—for Now
While some trade-focused sectors are feeling the pinch, Canada’s overall job market remains resilient. That said, economists are warning the long-term effects of these tariffs could be serious.
🇨🇦 Canada’s Counterplay
The federal and provincial governments are teaming up to remove internal trade barriers and find new markets—like expanding oil exports from Newfoundland and Labrador to Europe—to help cushion the blow.
🧠 So, What’s the Bank of Canada Thinking?
Although the Bank of Canada cut rates seven times between mid-2024 and early 2025, it has paused rate changes for two straight meetings now. The message? They’re not done fighting inflation.
“We are proceeding carefully with monetary policy,” Macklem said. “We want to see through the noise to set policy that supports the economy while ensuring inflation remains low and stable for Canadians.”
🇺🇸 Meanwhile, in the U.S.
The U.S. Federal Reserve also held its rate steady this month as it watches the impact of Trump’s tariffs unfold.
💬 TopRankin Takeaway
Until inflation shows real signs of retreat, don’t expect interest rates to come down. If you’re thinking about buying, refinancing, or renewing your mortgage, it’s more important than ever to talk strategy.
Have questions about how this affects your mortgage? Let’s chat!
